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The Impact Of Fiscal Policy On Gross Domestic Product In The European Union. A Panel Var Model Aproach

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  • Ioan TalpoÅŸ
  • Alexandru Avram
  • Roxana HeteÛ

Abstract

In our research, we intend to observe the influence of fiscal policy together with the interest rate and inflation rate on economic growth in the European Union member states. Therefore, our goal is to identify the impact of the main instruments of fiscal policy, using an unrestricted panel VAR model, on the evolution of GDP. In this way we can understand what is the response of the GDP of the member states of EU 27 to the evolution of public debt, government deficit, government spending, interest rate and inflation. Using impulse response functions we have seen that private consumption has a positive influence on GDP, the rise in public debt has a negative influence on the evolution of GDP, government expenditure has an alternating influence that turns from positive in the first half of the observation period into negative in the second, the interest rate has a strong negative influence while the inflation rate has a positive influence on the evolution of GDP.

Suggested Citation

  • Ioan TalpoÅŸ & Alexandru Avram & Roxana HeteÛ, 2013. "The Impact Of Fiscal Policy On Gross Domestic Product In The European Union. A Panel Var Model Aproach," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(15), pages 1-25.
    • Handle: RePEc:alu:journl:v:2:y:2013:i:15:p:25
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    References listed on IDEAS

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    Cited by:

    1. Joanna Stawska & Katarzyna Miszczyńska, 2022. "The impact of monetary and fiscal policy variables on the EU economic growth. Panel data analysis," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 9(4), pages 380-395, June.
    2. Florin-Cornel Popovici PhD student & Laura Nasta PhD student, 2015. "Use Of The European Union Financial Resources," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(25), pages 77-82, NOVEMBER.

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    More about this item

    Keywords

    monetary policy; fiscal policy; economic growth;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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