The power of fiscal multipliers in Croatia

June 2014
Financial Theory & Practice;2014, Vol. 38 Issue 2, p173
Academic Journal
This paper investigates fiscal multipliers in Croatia in the period 1996Q1-2011Q4. For this purpose, a Blanchard Perotti three variable baseline SVAR is employed as a no regime-switch model, along with a four variable baseline STVAR as a regime-switch model. Results show that during recessions fiscal multipliers in Croatia tend to be much larger and move in line with Keynesian assumptions, i.e. a positive government spending shock increases output, private consumption and private investment, while oppositely a positive tax shock worsens the same macroeconomic variables. Moreover, during recession times government spending for purchases of goods and services seems to be the most effective fiscal instrument for boosting economic activity.


Related Articles

  • Croatia's recession deepens in Q4.  // Regional Today;3/11/2014, p2 

    The article discusses the economic decline and deepening recession of Croatia from October to December 2013 as reported by the Croatian Bureau of Statistics in March 2014.

  • Country Intelligence Report: Croatia.  // Croatia Country Monitor;Aug2012, p1 

    The article offers information on the economic forecast for Croatia from 2012 to 2016. It states that combined weak export demand and domestic demand will hinder efforts to recover from the economic recession. However, it says that weak domestic demand will help moderate the levels of external...

  • Croatia: Bond Yield Compression Has Further To Run.  // Emerging Markets Monitor;3/26/2012, Vol. 17 Issue 49, p13 

    The article provides a positive outlook for the fixed income market in Croatia amid an improving sovereign credit profile and a substantial compression of yield on the 2017 4.75 percent bond.

  • Croatia: Expecting Weaker Growth.  // Emerging Markets Monitor;9/26/2011, Vol. 17 Issue 25, p14 

    This article provides an outlook for the performance of the Croatian economy in 2011. Business Monitor International Ltd. (BMI) revises down its forecast for the country's economic expansion. BMI attributes the scenario to lower government spending, net exports and investments. The firm also...

  • Country Intelligence: Report: Croatia.  // Croatia Country Monitor;Jun2012, p1 

    The article provides an overview of the economic and financial conditions of Croatia as of 2012. It notes that the public spending of the country has extremely bloated that will prompt the country to impose excessive tax rates to levels that will discourage foreign investments. It adds that the...

  • Country Reports - Croatia.  // Croatia Country Monitor;2014, p1 

    The article focuses on the economic and political condition of Croatia in 2014. Topics discussed include the struggle of the country's economy to exit the recession, the strong investment activity and return of a strong kuna which will maintain import demand high throughout the medium and long...

  • History Won't Sugar Coat Economic Lessons We Choose to Ignore. Mcgeehan, Pat // State Journal (WV);9/7/2012, Vol. 28 Issue 35, p29 

    The article discusses the reasons behind recessions and economic downturn in the U.S. It states that economic recessions occur because of reduced spending by citizens and increased supply of money by the government. It further states that previous economic downturn suggests that by cutting...

  • The long haul. Jaeger, Bethany // Illinois Issues;Jan2009, Vol. 35 Issue 1, p19 

    The article reports on the impact of the chronic fiscal problems faced by the state of Illinois. According to the author, Illinois' chronic fiscal problems will make it harder to recover from the national recession faced by the U.S. It is stated that one of the largest spending pressures faced...

  • Summary.  // Croatia Country Profile;Dec2005, p11 

    The article offers information on the economy of Croatia, which is considered as a prosperous nation in the Yugoslav region after Slovenia. It says that the country has slipped into economic recession in 1998 due to mismanagement of the economy and damage of war of independence in 1991-92. It...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics