Role of Fiscal Policy in Stimulating the Economic Recovery of the Western Balkan Countries

Abstract

The crisis caused by the coronavirus pandemic has raised the question of the role and possibilities of fiscal policy in mitigating its current effects and accelerating postpandemic recovery. This issue is relevant for all economies without exception, bearing in mind that aid packages to the population and the economy are predominantly based on fiscal stimulus. For this reason, the issue of the efficiency of expansionary fiscal policy has been raised again, taking into account the specific macroeconomic circumstances in which most economies find themselves. Therefore, the subject of this paper is the analysis of the optimal structure of the expansionary fiscal policy, with particular emphasis on the Western Balkans region, in the context of resolving the current macroeconomic consequences of the crisis and the possibility of providing both short and medium-term growth. Based on the analysis of specific macroeconomic circumstances in the countries of the Western Balkans, conclusions were reached as to which fiscal policy instrument can be used to achieve the previously described goals.