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Fiscal Multipliers in Bulgaria and Central and Eastern Europe Countries

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  • Sonya Georgieva
Abstract
The importance and possibilities of fiscal policy have been neglected by academics and politicians for decades after the macroeconomic revolution of 1970-1980. However, the Great Recession, the crisis in the European Union and the prolonged recession in many European economies have once again put fiscal policy, and especially its stabilizing role, at the centre of expert and public discussions. In countries with a high share of the public sector in the economy and whose monetary policy is constrained by various structural features of the economy and the financial system, the role of fiscal policy is particularly important, and it is a key lever of economic policy. These features characterize most countries in Central and Eastern Europe (CEE), which makes this region convenient for analyzing the effectiveness of the fiscal policy. The study empirically establishes the effects of shocks in budget expenditures and tax revenues on GDP in Bulgaria, Estonia and Lithuania for the period 1995-2018, applying the vector autoregression technique known as the Vector Autoregressive Model (VAR) as well as other, non-econometric valuation methods. Key factors that affect the dynamics in the size of fiscal multipliers are presented numerically and graphically.

Suggested Citation

  • Sonya Georgieva, 2021. "Fiscal Multipliers in Bulgaria and Central and Eastern Europe Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 131-167.
    • Handle: RePEc:bas:econst:y:2021:i:1:p:131-167
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    References listed on IDEAS

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    Cited by:

    1. Stoyan Tanchev & Naftaly Mose, 2023. "Fiscal Policy and Economic Growth: Evidence from European Union Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 19-36.
    2. Iana Paliova, 2024. "Fiscal Consolidation and Growth Effects of the EU Funding During 2021-2027 in Central and Eastern Europe," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 90-111.
    3. Victor Yotzov & Garabed Minassian & Pobeda Loukanova & Dimitar Zlatinov & Grigor Sariiski, 2022. "Bulgaria's economy during the pandemic," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 121-149.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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