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Economic Role of Government Budget Revision in the Presence of COVID-19

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  • Ledjon Shahini

    (Department of Economics, Faculty of Economy, University of Tirana, 1010 Tirana, Albania)

  • Perseta Grabova

    (Department of Finance, Faculty of Economy, University of Tirana, 1010 Tirana, Albania)

Abstract

Fiscal policies are one of the most important instruments of government to guide the progress of the country’s economic development. They find significant use in cases where the economy is experiencing a period of recession, such as the current one caused by COVID-19. This study aims to assess the multiplier effects that budget revision has on the economy for the case of Albania, and more specifically by referring to the initial and revised budget scenario for the year 2020 which is characterized by significant changes caused by the presence of COVID-19. Referring to the multipliers from the input–output tables (IOT) the total effect that the state budget brings to the economy for a certain year is derived. From this paper, it appears that the budget restructuring that takes place during the year does not take into account the multiplier effect in the economy, but is mostly done for specific purposes related to certain government functions. In this context, it is very important that various options during budget revision are evaluated, concluding with the option that has the highest returns for the economy.

Suggested Citation

  • Ledjon Shahini & Perseta Grabova, 2023. "Economic Role of Government Budget Revision in the Presence of COVID-19," Economies, MDPI, vol. 11(4), pages 1-14, April.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:4:p:118-:d:1124539
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    References listed on IDEAS

    as
    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    2. Alan J. Auerbach & Yuriy Gorodnichenko, 2013. "Output Spillovers from Fiscal Policy," American Economic Review, American Economic Association, vol. 103(3), pages 141-146, May.
    3. Auerbach, Alan J & Gorodnichenko, Yuriy, 2013. "Measuring the Output Responses to Fiscal Policy (vol 4, pg 1, 2012)," Department of Economics, Working Paper Series qt73c8q5wx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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