The growth impact of discretionary fiscal policy measures

Attinasi, Maria Grazia; Klemm, Alexander

doi:10.1016/j.jmacro.2016.08.004

Cited by 23 publications

(12 citation statements)

References 32 publications

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“…In addition, it turned out that, in the conditions of serious disturbances, such as the Great Recession, the application of discretionary fiscal policy is the most significant way to cope with the effects of the crisis and provide economic recovery. This thesis was confirmed in numerous studies (e.g., Spilimbergo et al, 2008;Attinasi & Klemm, 2014;Fetai, 2017). In this sense, the New Keynesian Phillips curve implicitly involves an integral approach to economic policy where price stability is viewed as the conditio sine qua non of the achievement of macroeconomic stability in a broader sense.…”

Section: The Phillips Curve and Stabilization Policy In The Aftermathmentioning

confidence: 72%

Савремени Концепти Филипсове Криве И Стабилизациона Макроекономска Политика

Михајловић¹,

Марјановић²

2020

TEME

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The stabilization of economic activity represents the basic purpose of macroeconomic policy. In the last few years, the achievement of price stability, or the relatively low and stable inflation rate, has been imposed as the policy’s main goal, in accordance with the recommendations of the so-called New consensus macroeconomics. In line with that, the identification of variables, which determine the inflation rate and cause its changes, is crucial. From its occurrence, the relationship of the Phillips curve provided an explanation of the inflation dynamics based on the movement of different factors, depending on the variant of the curve observed. Hence, the subject of the paper is the presentation and evaluation of the contemporary concepts of the Phillips curve in the context of the application of the efficient stabilization policy. The main objective of the paper is to reconsider the concept’s validity, especially in the conditions of serious economic disorders, such as the Great Recession. The applied analysis indicates that the dominant New Keynesian concept of the Phillips curve can serve for the successful conducting of economic policy, if it is supplemented with the variables of fiscal policy and financial stability policy.

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Section: The Phillips Curve and Stabilization Policy In The Aftermathmentioning

confidence: 72%

Савремени Концепти Филипсове Криве И Стабилизациона Макроекономска Политика

Михајловић¹,

Марјановић²

2020

TEME

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“…In this way, the impact of both the expenditure and the revenue side of the budget on economic growth can be investigated. M. G. Attinasi and A. Klemm [25], F. T. Boldeanu, I. Tache and M. Ion [26] use a similar technique and thus aim to show the impact of fiscal policy on overall growth. Furthermore, in the literature review section of our study, it is emphasized that the expansion of the public sector requires additional resources in government budgets, which further affects economic development.…”

Section: Methodsmentioning

confidence: 99%

The Armey curve: an empirical analysis of selected Balkan countries and Russia for the period 2006–2019

Nikolova

Angelov

2022

jour

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The subject of the analysis is to check the validity of the Armey curve which is frequently used in the scientific literature and to establish the optimal level of the public sector. The aim of the present study is to analyze the impact of the public sector through public expenditure on the possibility of achieving economic growth. The estimation is based on annual data for the period 2006–2019 of selected Balkan countries and Russia. The authors apply the ordinary least squares (OLS) method for a nonlinear regression model. The conclusion is that the Armey curve is valid for some of the countries involved in the research among which Serbia, North Macedonia and Russia. The public expenditure to Gross Domestic Product ratio’s threshold value, which maximizes economic growth, ranges from 32.94 to 42.37%. The average share of public expenditure in the analyzed countries is approximately equal to the threshold values that are obtained which is indicative of achievement to some extent the desired economic performance. However, the results of the study show that the growth of the public sector and its impact on economic development should not be underestimated.

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“…The literature has so far identified three ways in which fiscal rules can impact growth. First, they reduce fiscal volatility, which has been recognized to be detrimental to growth (Alimi, 2016;Attinasi & Klemm, 2016;Imbs, 2007;Ramey & Ramey, 1995). Second, they improve fiscal behavior and fiscal policy via budgetary outcomes (Hallerberg et al, 2007).…”

Section: Fiscal Rules Fiscal Performance and Growthmentioning

confidence: 99%

Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa

Nabieu

Bokpin

Osei

et al. 2021

African Development Review

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Over the past four decades, many economies have striven to find permanent solutions to persistent increases in public deficits and deterioration of growth. For most economies, the solution to this problem was the adoption of fiscal rules. This paper presents empirical evidence on the effects of fiscal rules on fiscal performance and economic growth using a dataset of 43 countries in Sub-Saharan Africa over 27 years. The study applies simultaneous equation models to determine the relationship between performance and growth in the public sector and also to avoid structural equation and endogeneity biases. The results show that fiscal rules significantly foster fiscal performance and decelerate growth. The study further finds the expenditure rules to be most effective in influencing fiscal balance and economic growth. The robust estimates further confirm that expenditure rules and government spending efficiency are necessary for promoting fiscal outcomes and economic growth.The study recommends the implementation of more revenue rules, debt rules and balance budget rules to ameliorate the negative effects of government spending on economic growth. In addition, Sub-Saharan African economies should carefully consider the rules applied to government spending since fiscal rules on productive spending will impede economic growth.

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The growth impact of discretionary fiscal policy measures

Cited by 23 publications

References 32 publications

Савремени Концепти Филипсове Криве И Стабилизациона Макроекономска Политика

Савремени Концепти Филипсове Криве И Стабилизациона Макроекономска Политика

The Armey curve: an empirical analysis of selected Balkan countries and Russia for the period 2006–2019

Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa

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