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Effectiveness Of Expansionary Fiscal Policy Under Conditions Of State Fiscal Crisis

Author

Listed:
  • Elzbieta Rogalska

    (University of Warmia and Mazury in Olsztyn)

Abstract

The paper provides synthetic presentation of key economic theories on the effectiveness of fiscal policy – neoclassical and keynesian view. Then the problem of the state fiscal budget crisis and its possible influence on the occurrence of ricardian equivalence. The empirical part of the paper presents several cases of significant fiscal stimulus, which proved to be totally ineffective in stimulating economic activity and several cases of fiscal adjustments that – despite the fears of politicians and economists on the negative impact on the economy in the short run – lead to a substantial increase in business activity and growth dynamics of GDP. These examples are supported by the interpretation of the possible factors that determined the nature of the various adjustments and their impact on business activity. The paper is closed with conclusions for further theoretical and empirical analysis, especially useful for fiscal policy in Middle and Eastern European countries in the time of global financial crisis.

Suggested Citation

  • Elzbieta Rogalska, 2012. "Effectiveness Of Expansionary Fiscal Policy Under Conditions Of State Fiscal Crisis," Oeconomia Copernicana, Institute of Economic Research, vol. 3(4), pages 5-22, December.
    • Handle: RePEc:pes:ieroec:v:3:y:2012:i:4:p:5-22
    DOI: 10.12775/OeC.2012.020
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    File URL: http://dx.doi.org/10.12775/OeC.2012.020
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    Citations

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    Cited by:

    1. Adam P. Balcerzak & Elzbieta Rogalska, 2016. "Non-Keynesian Effects of Fiscal Consolidations in Central Europe in the Years 2000-2013," Chapters, in: Mehmet Huseyin Bilgin & Hakan Danis (ed.),Entrepreneurship, Business and Economics - Vol. 2. Proceedings of the 15th Eurasia Business and Economics Society, edition 1, volume 2, chapter 18, pages 271-282, Institute of Economic Research.

    More about this item

    Keywords

    fiscal policy; fiscal adjustments; fiscal contraction; fiscal expansion;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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