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Overcoming the Effects of Restrictive Fiscal Policy: The Case of Argentina and Serbia

Author

Listed:
  • Todorović Miloš

    (University of Niš, Faculty of Economics, Serbia)

  • Marković Ivan

    (University of Niš, Faculty of Economics, Serbia)

  • Grahovac Dijana

    (University of Business Studies, Banja Luka, Bosnia and Herzegovina)

Abstract

The paper analyses one of the most important economic issues relevant to most countries. The issue involves how to as painless as possible overcome the problems of high budget deficits and excessive accumulated public debt. Argentina and Serbia are used as an example. Argentina implemented rigorous saving measures in 2002 and Serbia began to implement restrictive budgetary measures in 2014. The effects of such a policy can be designed for the future. Results indicate that the key to Argentina’s success lies in the transition to a floating exchange rate and the high level of correlation between the growth of the foreign exchange rate and growth in exports. When comparing strict fiscal policy in Argentina and Serbia, it should be emphasised that the measures in Serbia are far less stringent than those that were established in Argentina. But it also means that the effect of reducing budget expenditures should have less of an impact on GDP reduction than in the case of Argentina.

Suggested Citation

  • Todorović Miloš & Marković Ivan & Grahovac Dijana, 2019. "Overcoming the Effects of Restrictive Fiscal Policy: The Case of Argentina and Serbia," Economic Themes, Sciendo, vol. 57(2), pages 165-179, June.
    • Handle: RePEc:vrs:ecothe:v:57:y:2019:i:2:p:165-179:n:3
    DOI: 10.2478/ethemes-2019-0010
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal policy; monetary stability; debt; deflation;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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