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Fiscal Policy And Economic Activity In The Republic Of Croatia: A Cointegration Analysis

Author

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  • Manuel Benazić

    (Istria Credit Bank Umag d.d.)

Abstract

The aim of this paper is to examine whether changes of fi scal policy variables i.e. government revenues and government expenditures infl uence the real economic activity in the Republic of Croatia. Long-run relationship between fi scal policy variables and gross domestic product is examined by cointegration analysis using “general-to-specific” approach. The impact of fi scal variables was analyzed on the basis of a forecast error variance decompositions and impulse response functions. The results indicate that an increase in government revenues will have a negative impact on real economic activity while government expenditures will have a positive impact on real economic activity only in the starting period, but in the long run are almost neutral.

Suggested Citation

  • Manuel Benazić, 2006. "Fiscal Policy And Economic Activity In The Republic Of Croatia: A Cointegration Analysis," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 57(12), pages 882-917.
    • Handle: RePEc:hde:epregl:v:57:y:2006:i:12:p:882-917
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    Citations

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    Cited by:

    1. Bayan Mohamad Alshaib & Abdullah Mohammad Ghazi Al khatib & Alina Cristina Nuta & Mohamad Hamra & Pradeep Mishra & Rajani Gautam & Sarfraz Hussain & Cristina Gabriela Zamfir, 2023. "Fiscal Sustainability and Its Implications for Economic Growth in Egypt: An Empirical Analysis," SAGE Open, , vol. 13(4), pages 21582440231, December.
    2. Goran Petrevski & Borce Trenovski & Biljana Tashevska, 2019. "The effectiveness of fiscal and monetary policies in a small open economy – the case of Macedonia," Post-Communist Economies, Taylor & Francis Journals, vol. 31(6), pages 805-821, November.

    More about this item

    Keywords

    fiscal policy; cointegration; VEC and structural VEC model; forecast error variance decompositions; impulse response functions;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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