So alike,yet so different: Comparing fiscal multipliers across EU members and candidates |
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| Institution: | 1. University of Orléans, CNRS, LEO, FRE 2014, France and West University of Timisoara, East-European Center for Research in Economics and Business (ECREB), Romania;2. University of Orléans, CNRS, LEO, FRE 2014 and INFER, France;1. Aletheia University, Taiwan;2. National Taichung University of Science and Technology, Taiwan;1. University of Milano, Bicocca and CefES, Italy;2. University of Pavia, Griffith University and CefES, Italy;1. Faculty of Economics, Chuo University, Japan;2. Graduate School of Economics, Kyoto University, Japan;1. School of Economics, Sichuan University, Chengdu, 610065, China;2. Southwestern University of Finance and Economics, Chengdu, China;1. University of Barcelona, Spain;2. Catholic University of Valencia, Spain |
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| Abstract: | We estimate, using a Panel Vector Autoregressive approach and data from 2001Q1 to 2017Q1, the fiscal multipliers of the European Union (EU) members and candidates. These countries are grouped according to their stages of integration: original members, new Eurozone members, and candidates for the Eurozone and the EU itself. For each group, we assess the impact of a positive spending shock (expansionary) or a positive tax shock (contractionary) on GDP. Our findings suggest that: (i) rising government spending increases GDP in both the EU and Eurozone candidates (Keynesian multipliers), but slightly decreases it in the Eurozone members (non-Keynesian multipliers); (ii) higher taxes are associated with mixed results in terms of GDP dynamics - both increases and decreases in terms of GDP are found - in the four country groups (suggesting the presence of Keynesian and non-Keynesian multipliers). Overall, these outcomes indicate that spending multipliers are, compared to tax multipliers, more sensitive to European Union or Eurozone membership. |
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| Keywords: | European union candidates Eurozone Fiscal multipliers (Interacted) panel VAR E62 F62 O52 |
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