Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States |
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Authors: | Paweł Borys Piotr Ciżkowicz Andrzej Rzońca |
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Affiliation: | 1. Warsaw School of Economics;2. Monetary Policy Council, National Bank of Poland |
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Abstract: | We identify fiscal policy shocks in the EU new member states using four different methods. We use panel data techniques to estimate the output response to these shocks. We find that investment and export growth increase after fiscal consolidation and decelerate after fiscal stimulus when the shocks are expenditure‐based. In contrast, private consumption does not respond to fiscal policy shocks. Expenditure‐based fiscal consolidations reduce wages, supporting the view that fiscal consolidation of such composition enhances the competitiveness and profitability of domestic enterprises. In contrast, we do not find evidence of fiscal shocks affecting households' confidence. |
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Keywords: | expansionary fiscal consolidation contractionary fiscal stimulus EU new member states panel data C23 D22 D81 E23 E32 E44 E62 |
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