scholarly journals Economic policy and confidence of economic agents – a causal relationship?

2020 ◽  
Vol 20 (4) ◽  
pp. 471-484
Author(s):  
Silvo Dajčman
Keyword(s):  
Fiscal Policy ◽  
Granger Causality ◽  
Government Spending ◽  
Government Expenditure ◽  
Policy Instruments ◽  
Consumer Confidence ◽  
Causality Analysis ◽  
Economic Agents ◽  
Business Confidence ◽  
The Government

AbstractThe purpose of this paper is to study whether innovations in monetary and fiscal policy are a leading indicator of future business and consumer confidence and reverse applying the panel Granger causality analysis to two periods in the history of the euro area: before and after the start of the Great Recession. The results show that Granger causality interaction between the confidence of economic agents and the stance of monetary policy (measured by the shadow rate) is stronger than between the former and the fiscal policy instruments. The European Central Bank (ECB) shadow rate innovations Granger caused business and consumer confidence in both periods, but also indicators of confidence Granger caused the shadow rate. No such feedback could be established between two fiscal policy instruments (government expenditure and revenue growth) and the indicators of confidence. Government spending and revenues Granger caused business confidence in the first subperiod, but not in the second subperiod when the causality reversed. The government revenues Granger caused consumer confidence in the first subperiod, while government expenditures in the second subperiod. Consumer confidence Granger caused government spending in the first subperiod.

scholarly journals The Effect of Government Expenditures on Economic Growth. the Case of Albania

2014 ◽  
Vol 2 (1) ◽  
pp. 242
Author(s):  
Lorena Çakerri ◽  
Migena Petanaj ◽  
Oltiana Muharremi
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Fiscal Policy ◽  
Government Spending ◽  
National Income ◽  
Policy Instruments ◽  
Government Expenditures ◽  
Global Crisis ◽  
The Government ◽  
The Impact

One of the main issues of economic policy and government is to ensure a sustainable economic growth of a country.Economic growth has been at the center of every government in place since at least year 2000.Though for this teen-year ,growth values were satisfactory in Albania, the macroeconomic situation changed in 2009,when appeared the elements of the global crisis. Economic global crisis has awakened interest in the case of fiscal policy.Fiscal policy and monetary policy as well, are two basci components of state economic policy which are used for macroeconomic purposes:influence of gross domestic product, the level of enmployment, income and price level. The two main instruments of fiscal policy are government expenditures and taxes. Government expenditures are considered as the most powerful weapon available to fiscal policy makers, especially in developing countries such as Albania. During the last century , governments have spent more and more in relation to their national income. This increase in government spending can be explained by the impact that this variable can have on the economic growth of a country? In fact ,about the connection between the government spending and the economic growth of a country various studies seem full of contradictions.This conflict is explained by changes in terms of definitions and from the differencies of the various countries included in these studies. The objective of this study is to give an appropriate answer to the question : Can government spending have the potential to impact and stimulate economic growth? How the changes of the size of the fiscal policy instruments have affected indicators of economic growth in Albania? This article will focus on the role that the fiscal policy has on economic growth , especially in our country, reviewing economic growth theories, debates about the effectiveness of fiscal policy , and active fiscal policy. Finally some suggestions for the future addressing the government expenditures towards priority sectors.

scholarly journals Deficit Financing’ or ‘Deficit-Reduction Financing?’ Debates in Contemporary Economics: Origins, Confusions and Clarity

2019 ◽  
Vol 32 (1) ◽  
pp. 67-78
Author(s):  
Ann Pettifor Ann Pettifor
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Government Spending ◽  
Government Expenditure ◽  
National Income ◽  
Spare Capacity ◽  
Government Deficits ◽  
Deficit Reduction ◽  
The Government ◽  
Public Sector Deficit

The analysis of government deficits and public debt points to a fundamental error in contemporary economic discussions. It is not possible to assess the stance of fiscal policy from estimates of the public sector deficit. John Maynard Keynes’s macroeconomics and the empirical evidence discussed in this paper indicate that expansionary fiscal policy financed by loan issues will lead to growth in economic activity and employment. In an economy with spare capacity and idle resources, high government expenditure generates income, including tax revenues and thereby reduces the government deficit, and cuts public debt. The main purpose of increased loanfinanced government spending at times of private economic weakness is to increase the nation’s income. Keynes argued that any such government spending was not deficit spending, because he understood the spending as the most sensible means to cut the deficit. Deficit-reduction spending might be a more appropriate definition, because as he argued with Josiah Stamp: “You will never balance the budget through measures which reduce national income” (Keynes, 1978, vol. 21, p. 149).

scholarly journals Fiscal Policy Shocks and Private Consumption in Nigeria: Blanchard-Perotti (2002) Approach

2015 ◽  
Vol 7 (6(J)) ◽  
pp. 42-60
Author(s):  
OSENI Isiaq Olasunkanmi
Keyword(s):  
Fiscal Policy ◽  
Government Spending ◽  
Private Consumption ◽  
Government Expenditure ◽  
Structural Var ◽  
Long Run ◽  
Short Period ◽  
Policy Shocks ◽  
Negative Effect ◽  
The Government

This paper examines the effects of fiscal policy shocks on private consumption in Nigeria. Albeit, there is a considerable number of works examining the effects of fiscal policy shocks on private consumption globally but in Nigeria, no study has used the structural VAR approach by Blanchard and Perotti (2002) as used in this paper. This approach relies on institutional information about the tax and transfer systems and the timing of tax collection to identify the automatic response of taxes and spending to private consumption as well as to infer fiscal shocks. The key result of this paper is that positive government spending shocks in Nigeria have an instantaneous negative effect on private consumption. The effect becomes significant in the period following the shock. Also, positive tax shocks have a negative effect on private consumption in the period of a shock and the effect becomes statistically insignificant afterwards. On this premises, one-off changes in government spending and taxes in Nigeria are long-lived and short-lived respectively. Thus, the government expenditure changes can be used to support private consumption in the long-run while that of taxes can only be used to support private consumption for a short period.

scholarly journals The Influence Of Fiscal Policy On Agriculture Sector In Java Island

Agro Ekonomi ◽  
2019 ◽  
Vol 29 (2) ◽  
pp. 173
Author(s):  
Siti Sabrina Salqaura ◽  
Jangkung Handoyo Mulyo ◽  
Dwidjono Hadi Darwanto
Keyword(s):  
Fiscal Policy ◽  
Foreign Investment ◽  
Government Spending ◽  
Government Expenditure ◽  
Provincial Government ◽  
Food Crops ◽  
Domestic Investment ◽  
Agriculture Sector ◽  
The Government ◽  
Positive Effect

One of government interventions to encourage the improvement of agriculture sector output is through fiscal policy in the form of government spending. Total government expenditure in provincial aggregate is used as government spending. The availability of fiscal decentralization policy provides an opportunity for the provincial government to manage the government expenditure allocation. This research aims to discover the influence of fiscal policy in Java by using the government expenditure variable and to find the influence of foreign investment, domestic investment and agricultural labor absorption toward GRDP of agriculture subsectors. This research used regression analysis of cross section SUR fixed effect panel data. The results indicate the total expenditure having significant positive effect towards GRDP of agriculture subsectors are the subsectors of food crops, plantation, livestock and fishery. Forestry subsector cannot be analyzed further because the error is not normally distributed. The absorption of labor in agriculture sector has significant negative effect towards plantation and livestock subsectors. The foreign investment has significant positive effect towards livestock subsector and domestic investment has negative significant influence towards GRDP of food crops subsector. The provincial government needs to support agriculture subsectors by allocating expenditure that will increase GRDP of agriculture subsectors and increasing foreign direct investment and domestic investment to agriculture subsectors.

scholarly journals The Effects of Government Education Spending on School Enrollment in Indonesia

2020 ◽  
Vol 20 (1) ◽  
pp. 288
Author(s):  
Megawati Megawati
Keyword(s):  
Government Spending ◽  
Government Expenditure ◽  
Probit Model ◽  
School Enrollment ◽  
Education Spending ◽  
Cross Sectional ◽  
Interaction Terms ◽  
Education Data ◽  
Government Education ◽  
The Government

Government expenditure for education increases every year for the implementation of education sector including to increase the number of enrollment rate. However, there are some children who do not enroll in school especially senior high school-aged children. This study examines the effects of government spending on education on school enrollment in Indonesia. This research uses cross-sectional data from the National Socioeconomic Survey (Susenas) and the government spending on education data for four years. This study uses probit model by employing the government education spending as the main factor. The control variables used in this study consist of parents’ education, household expenditure, male, urban, birth order, the number of siblings, missing parent, GRDP per capita, year dummy, and interaction terms among some variables. The observation is divided into two groups of age: 7-15 and 16-18. The results show that the government education spending has a positive and significant effect on school enrollment in Indonesia. In addition, the interaction terms show that the government education spending is associated with greater probability of school enrollment for poor children and for the girls.

scholarly journals Analisis kausalitas antara pengeluaran pemerintah dan pertumbuhan ekonomi di Pulau Sumatera

2019 ◽  
Vol 15 (1) ◽  
pp. 15-34
Author(s):  
Nadine Brillianta Hanifah ◽  
Syamsurijal A Kadir ◽  
Anna Yulianita
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Granger Causality ◽  
Government Spending ◽  
Government Expenditure ◽  
The Other ◽  
West Sumatra ◽  
Causality Relationship ◽  
Causality Model ◽  
The Relationship

This study aims to investigate the relationship between government expenditure and economic growth in each province on the island of Sumatra during the period 2007-2016 using panel data. The method used is a quantitative approach by applying the Granger Causality model. The findings of this study indicate that there are no two-way relationships from the 10 provinces in Sumatra. But there is a one-way relationship between government spending and economic growth, which is found in the Province of West Sumatra and Bengkulu Province. Whereas the other 8 provinces have no one-way and two-way causality relationship

How Effective Is Resource Stabilization Fund in a Mono-product Economy?

2018 ◽  
Vol 19 (4) ◽  
pp. 842-858 ◽  
Author(s):  
Olusegun Felix Ayadi ◽  
Ladelle M. Hyman ◽  
Johnnie Williams ◽  
Bettye Desselle
Keyword(s):  
Government Spending ◽  
Positive Impact ◽  
Government Expenditure ◽  
Model Framework ◽  
Fiscal Management ◽  
Crude Oil Prices ◽  
Boom And Bust ◽  
Fiscal Balance ◽  
The Government

In managing a mono-product economy, the Nigerian government expenditure patterns follow revenue patterns in cycles of boom and bust in crude oil prices. Thus, fiscal policy becomes procyclical, which is an indicator of poor fiscal management. To arrest this situation, the government established a stabilization fund in 2004. The objective of this article is to provide a better understanding of the role of a stabilization fund in the fiscal management of the Nigerian economy. This is done using an econometric model framework that explains both government spending and fiscal balance as a share of GDP while controlling for a set of economic and demographic variables. The results indicate that the establishment of a stabilization fund has no moderating effect on government spending behaviour. Moreover, the evidence shows that the stabilization fund has a positive impact on fiscal balance during the sample period.

Government expenditure and economic growth in the European Union countries

2018 ◽  
Vol 45 (2) ◽  
pp. 372-386 ◽  
Author(s):  
Gitana Dudzevičiūtė ◽  
Agnė Šimelytė ◽  
Aušra Liučvaitienė
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Government Spending ◽  
Government Expenditure ◽  
The European Union ◽  
Policy Makers ◽  
Content Type ◽  
Eu Countries ◽  
The Government ◽  
The Relationship

Purpose The purpose of this paper is to provide more reliable estimates of the relationship between government spending and economic growth in the European Union (EU) during the period of 1995-2015. Design/methodology/approach The methodology consisted of several different stages. In the first stage for an assessment of dynamics of government spending and economic growth indicators over two decades, descriptive statistics analysis was employed. Correlation analysis helped to identify the relationships between government expenditures (GEs) and economic growth. In the third stage, for modeling the relationship and the estimation of causality between GE and economic growth, Granger causality testing was applied. Findings The research indicated that eight EU countries have a significant relationship between government spending and economic growth. Research limitations/implications This study has been bounded by general GE and economic growth only. The breakdowns of general GE on the basis of the activities they support have not been considered in this paper, which is the main limitation of the research. Despite the limitation, it might be maintained that the research highlights key relationships in the EU countries. Originality/value These insights might be useful for policy makers. In countries with unidirectional causality running from GE to economic growth, the government can employ expenditure as a factor for growth. The governments should ensure that resources are properly managed and efficiently allocated to accelerate economic growth in the countries with unidirectional causality from GDP to GE.

scholarly journals The South African tax mix and economic growth

2014 ◽  
Vol 8 (2) ◽  
pp. 201-210 ◽  
Author(s):  
AH De Wet ◽  
NJ Schoeman ◽  
SF Koch
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
South African ◽  
Government Spending ◽  
Government Expenditure ◽  
Indirect Taxation ◽  
Size Of Government ◽  
Direct Taxation ◽  
The Impact ◽  
Direct Tax

The research reported in this paper suggests that government fiscal policy can influence economic growth through alterations in the tax mix and the overall size of government spending.   The authors estimate the impact on economic growth of changes in fiscal policy via government expenditure, direct taxation and indirect taxation.  The results show that economic growth is negatively affected by increases in the size of government, as reflected in its expenditures and direct tax revenues, although significant indirect tax effects are not found.     

scholarly journals Corruption, fiscal policy, and growth: a unified approach

2017 ◽  
Vol 17 (2) ◽  
Author(s):  
Sugata Ghosh ◽  
Kyriakos C. Neanidis
Keyword(s):  
Fiscal Policy ◽  
Government Spending ◽  
Income Tax ◽  
Government Expenditure ◽  
Tax Revenue ◽  
Unified Approach ◽  
Unified Framework ◽  
Bureaucratic Corruption ◽  
Inflation Rates ◽  
The Impact

AbstractWe study the effects of bureaucratic corruption on fiscal policy and economic growth, where corruption (i) reduces the tax revenue raised from households, (ii) inflates the volume of government spending, and (iii) reduces the productivity of “effective” government expenditure. We distinguish between the policies pursued by (a) a non-optimizing, and (b) an optimizing government. For both cases, corruption leads to higher income tax and inflation rates and a lower level of government spending, thus hindering growth. In the circumstances, an activist government could allocate its resources in attempting to reduce the type of corruption that harms growth the most. Finally, the findings from our unified framework could rationalize the sometimes conflicting empirical evidence on the impact of corruption on growth in the literature.

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