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- Title
The power of fiscal multipliers in Croatia.
- Authors
GNIP, ANA GRDOVIĆ
- Abstract
This paper investigates fiscal multipliers in Croatia in the period 1996Q1-2011Q4. For this purpose, a Blanchard Perotti three variable baseline SVAR is employed as a no regime-switch model, along with a four variable baseline STVAR as a regime-switch model. Results show that during recessions fiscal multipliers in Croatia tend to be much larger and move in line with Keynesian assumptions, i.e. a positive government spending shock increases output, private consumption and private investment, while oppositely a positive tax shock worsens the same macroeconomic variables. Moreover, during recession times government spending for purchases of goods and services seems to be the most effective fiscal instrument for boosting economic activity.
- Subjects
CROATIA; PUBLIC spending; INCOME; RECESSIONS; INVESTMENTS; ECONOMIC activity; ECONOMIC history
- Publication
Financial Theory & Practice, 2014, Vol 38, Issue 2, p173
- ISSN
1846-887X
- Publication type
Article
- DOI
10.3326/fintp.38.2.3