Template-Type: ReDIF-Paper 1.0

Author-Name: Rilind Kabashi
Author-Name-First: Rilind
Author-Name-Last: Kabashi
Author-Email: KabashiR@nbrm.mk
Author-Workplace-Name: National Bank of the Republic of Macedonia

Title: The cyclical character of fiscal policy in transition countries

Abstract: This study investigates the cyclical character of fiscal policy in transition countries in Central, Eastern and Southeastern Europe (CESEE) in the period from 1995 to 2011, using system GMM as the preferred estimation method for the underlying sample and model specification. The study finds discretionary policy in the CESEE EU Member States and in the Western Balkan countries to have been procyclical, thus aggravating economic fluctuations, whereas automatic stabilizers moved overall policy to an acyclical stance. In addition, the analysis indicates considerable differences in the cyclical character of fiscal policy between transition countries and the Western European EU Member States, where both overall fiscal policy and discretionary policy were acyclical. Finally, the study also offers several recommendations for policymakers, particularly in transition countries.

Length: 20
Creation-Date: 2016-08
File-URL: http://www.nbrm.mk/WBStorage/Files/WebBuilder_Cyclical_haracter_fiscal_policy_transition_countries_RK.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 2016-03
Classification-JEL: H62, E32, C33
Keywords: fiscal policy, transition countries, European Union, system GMM
Handle: RePEc:mae:wpaper:2016-03