Effectiveness of expansionary fiscal policy under conditions of state fiscal crisis

Authors

  • Elżbieta Rogalska University of Warmia and Mazury in Olsztyn

DOI:

https://doi.org/10.12775/OeC.2012.020

Keywords:

fiscal policy, fiscal adjustments, fiscal contraction, fiscal expansion

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.

Downloads

Download data is not yet available.

References

Alesina A., Ardagna S. (1998), Fiscal Adjustments. Why They Can Be Expansionary, ?Economic Policy?, Vol. 13, No. 27.
Barro R.J. (1997), Makroekonomia, Polskie Wydawnictwo Ekonomiczne, Warszawa.
Bartolini L., Razin A., Symansky S. (1995), G-7 Fiscal Restructuring in the 1990s: Macroeconomic Effects, Vol. 10, No. 1.
Bredner A., Drazen A. (2005), Political Budget Cycles in New versus Established Democracies, ?Journal of Monetary Economics?, No. 52.
Elmendorf D. W., Mankiw N.G. (1998), Government Debt, NBER Working Paper Series, Working Paper No. 6470.
Fleming M.J. (1962), Domestic Financial Policies under Fixed and under Floating Exchange Rates, IMF Staff Papers, No 3.
Giavazzi F., Jappelli T. , Pagano M. (2000), Searching for Non-linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries, NBER Working Paper Series, Working Paper No. 7460.
Giavazzi F., Pagano M. (1995), Non-Keynesian Effects of Fiscal Policy Changes: International Evidence and the Swedish Experience, NBER Working Paper Series, Working Paper No. 5332.
Giavazzi F., Pagano M. (1990), Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries, NBER Working Paper Series, Working Paper No. 3372.
Giavazzi F., Pagano M. (1989), Confidence Crises and Public Debt Management, NBER Working Paper Series, Working Paper No. 2926.
Hicks J.R. (1997), Mr. Keynes and the ?classics?: A suggested Interpretaion, ?Econometrica?, Vol. 5.
Ihori T., Nakamoto A. (2005), Japan?s Fiscal Policy and Fiscal Reconstruction, Discussion Paper Series, Hitotsubashi University Reaserch Unit of Statistical Analysis in Social Science, No. 99.
Ito T. (2009), Efectiveness of Fiscal Policy, the case of Japan, presentation at the IMF, Washington DC, March 19.
Mundell R.A. (1963), Capital Mobility and Stabilization Policy under Fixed and Flexible Exchenge Rate, ?Canadian Journal of Economics and Political Science?, Vol. 29, No. 4.
Perri F. (1999), The Role of Fiscal Policy in Japan: a Quantitative Study, Business and Economic Studies at NYU.
Perotti R. (1999), Fiscal Policy in Good Times and Bad, ?The Quarterly Journal of Economics?, Vol. 114. No. 4.
Potera J.M., Summers L.H. (1987), Finite Lifetimes and the Effects of Budget Deficit on National Saving, ?Journal of Monetary Economics?, Vol. 20, No. 2.
Purfield C. (2003), Fiscal Adjustment in Transition Countries: Evidence from the 1990s, IMF Working Paper, WP/03/36.
Stansel D., Mitchell D.T. (2008), State Fiscal Crises: Are Rapid Spending Increases to Blame?, ?Cato Journal?, Vol. 28., No. 3.
Wutanabe K., T. Wutanabe, T. Wutanabe (1999), Tax Policy and Consumer Spending: Evidence from Japanese Fiscal Experiments, NBER Working Paper Series, Working Paper No. 7252.

Downloads

Published

31-12-2012

Issue

Section

Articles

How to Cite

Rogalska, E. (2012). Effectiveness of expansionary fiscal policy under conditions of state fiscal crisis. Oeconomia Copernicana, 3(4), 5-22. https://doi.org/10.12775/OeC.2012.020

Similar Articles

71-80 of 91

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)