Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle?
This paper analyzes fiscal policy sustainability and cyclicality in Croatia. The main novelty of the paper is that our fiscal response function allows for asymmetric behavior over the business cycle. We allow fiscal policy sustainability and cyclicality to differ across the expansionary and recessio...
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| Format: | Article |
| Language: | English |
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Institute of Public Finance
2021-12-01
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| Series: | Public Sector Economics |
| Subjects: | |
| Online Access: |
http://www.pse-journal.hr/upload/files/pse/2021/4/3.pdf
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| _version_ | 1818838081588953088 |
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| author | Vladimir Arcabic Frane Banic |
| author_facet | Vladimir Arcabic Frane Banic |
| author_sort | Vladimir Arcabic |
| collection | DOAJ |
| description | This paper analyzes fiscal policy sustainability and cyclicality in Croatia. The main novelty of the paper is that our fiscal response function allows for asymmetric behavior over the business cycle. We allow fiscal policy sustainability and cyclicality to differ across the expansionary and recessionary regimes. The overall results suggest that fiscal policy in Croatia is both sustainable and countercyclical. We find evidence of asymmetric behavior of fiscal policy cyclicality. In the expansionary regime, fiscal policy is countercyclical, while in the recessionary regime, it varies between procyclical and acyclical. On the other hand, we find only limited evidence of asymmetric behavior of public debt sustainability. During good times, Croatian policymakers try to keep fiscal policy both sustainable and countercyclical, which is required fiscal policy behavior. In recessionary times, the characteristics of fiscal policy are not so clear, but tend to be procyclical or acyclical. |
| first_indexed | 2024-12-19T03:32:44Z |
| format | Article |
| id | doaj.art-4ebaae31480241f8b7f203c20d4c6f70 |
| institution | Directory Open Access Journal |
| issn | 2459-8860 |
| language | English |
| last_indexed | 2024-12-19T03:32:44Z |
| publishDate | 2021-12-01 |
| publisher | Institute of Public Finance |
| record_format | Article |
| series | Public Sector Economics |
| spelling | doaj.art-4ebaae31480241f8b7f203c20d4c6f702022-12-21T20:37:27ZengInstitute of Public FinancePublic Sector Economics2459-88602021-12-0145443345710.3326/pse.45.4.37958Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle?Vladimir Arcabic0Frane Banic1 University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia Croatian National Bank, Zagreb, Croatia This paper analyzes fiscal policy sustainability and cyclicality in Croatia. The main novelty of the paper is that our fiscal response function allows for asymmetric behavior over the business cycle. We allow fiscal policy sustainability and cyclicality to differ across the expansionary and recessionary regimes. The overall results suggest that fiscal policy in Croatia is both sustainable and countercyclical. We find evidence of asymmetric behavior of fiscal policy cyclicality. In the expansionary regime, fiscal policy is countercyclical, while in the recessionary regime, it varies between procyclical and acyclical. On the other hand, we find only limited evidence of asymmetric behavior of public debt sustainability. During good times, Croatian policymakers try to keep fiscal policy both sustainable and countercyclical, which is required fiscal policy behavior. In recessionary times, the characteristics of fiscal policy are not so clear, but tend to be procyclical or acyclical. http://www.pse-journal.hr/upload/files/pse/2021/4/3.pdf fiscal policy; sustainability; cyclicality; uncertainty; public debt; nonlinear models |
| spellingShingle | Vladimir Arcabic Frane Banic Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? Public Sector Economics fiscal policy; sustainability; cyclicality; uncertainty; public debt; nonlinear models |
| title | Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? |
| title_full | Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? |
| title_fullStr | Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? |
| title_full_unstemmed | Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? |
| title_short | Characteristics of fiscal policy in Croatia: does it depend on the phase of the business cycle? |
| title_sort | characteristics of fiscal policy in croatia does it depend on the phase of the business cycle |
| topic | fiscal policy; sustainability; cyclicality; uncertainty; public debt; nonlinear models |
| url |
http://www.pse-journal.hr/upload/files/pse/2021/4/3.pdf
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| work_keys_str_mv | AT vladimirarcabic characteristicsoffiscalpolicyincroatiadoesitdependonthephaseofthebusinesscycle AT franebanic characteristicsoffiscalpolicyincroatiadoesitdependonthephaseofthebusinesscycle |