Fiscal Consolidation Start and its Determinants Analysis Within European Member Countries
Purpose: The purpose of the research from the theoretical point of view is to define the "start of fiscal consolidation" and to clarify the effects of selected determinants on its initiation. The purpose of the paper, in an empirical context, is to empirically assess the impact of sele...
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| Format: | Article |
| Language: | English |
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University of Montenegro - Faculty of Economics Podgorica
2017-09-01
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| Series: | Montenegrin Journal of Economics |
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| Online Access: | http://www.mnje.com/sites/mnje.com/files/135-148_-_mihokova.pdf |
| Summary: | Purpose: The purpose of the research from the theoretical point of
view is to define the "start of fiscal consolidation" and to clarify the
effects of selected determinants on its initiation. The purpose of the
paper, in an empirical context, is to empirically assess the impact of
selected determinants on the start of consolidation in the EU member
states in 1995-2015 using quantitative economics. The paper
was developed within the project VEGA 1/0967/15. Methodology:
The empirical assessment of the research objective is divided into
four phases: (1) creation of research review using EBHC methodology,
(2) identification of “start” of fiscal consolidation within selected
period, (3) panel econometric analysis: model specification, quantification
of model’s parameters and model verification and (4) research
assessment and discussion. Within the analysis, the traditional,
specific and general methods were used (systemic review according
to EBHC methodology, content analysis, panel regression analysis,
synthesis). Approach: Approach identifies “start” of consolidation
episodes using selected identification rules. Using the panel
regression analysis (OLS, FEM and REM models) approach the statistically
significant macroeconomic, fiscal, political and other determinants
and quantification of the polarity of their impact on the fiscal
consolidation start were analysed. Findings: Based on the performed
econometric analysis can be stated that the start of consolidation
is significantly determined by initial macroeconomic and fiscal
situation in the country which are captured by the size of output
gap and GDP growth as well as the size of CAPB, budget expenditure
and the revenue side. Political and other determinants (such as
crisis) can also influence the start of consolidation episodes.. |
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| ISSN: | 1800-5845 1800-6698 |