Macroeconomic effects of fiscal consolidation on economic activity in SSA countries
This paper studies the effects of fiscal measures in 40 sub-Saharan countries on economic output, unemployment, consumption, private investment, REER, and current account balance. The study estimates impulse response functions with local projections, based on a yearly dataset covering 40 countries o...
Elmentve itt :
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| Dokumentumtípus: | Cikk |
| Megjelent: |
2023
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| Sorozat: | THE JOURNAL OF ECONOMIC ASYMMETRIES
28 |
| Tárgyszavak: | |
| doi: | 10.1016/j.jeca.2023.e00312 |
| mtmt: | 36286812 |
| Online Access: | http://publicatio.bibl.u-szeged.hu/37703 |
| Tartalmi kivonat: | This paper studies the effects of fiscal measures in 40 sub-Saharan countries on economic output, unemployment, consumption, private investment, REER, and current account balance. The study estimates impulse response functions with local projections, based on a yearly dataset covering 40 countries over 2000–2019. The key variable in the dataset is a measure of fiscal stance computed following Blanchard (1993), with a threshold of 1.5%. The study finds that in the short run, fiscal consolidation reduces real GDP and private demand. In addition, the current account balance responds positively to a shock in fiscal consolidation, whereas the real effective exchange rate responds negatively. Moreover, compared with revenue-based consolidations, spending-based consolidations lead to smaller losses in output. Our finding also reveals that fiscal consolidations also depend on economic cycles, with a lower output loss during an economic boom. Finally, this study suggests that fiscal consolidations should be carried out based on spending-based consolidations and have to be preceded by an economic boom. © 2023 The Authors |
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| Terjedelem/Fizikai jellemzők: | 18 |
| ISSN: | 1703-4949 |