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The Effects of Fiscal Policy on Economic Growth. ACADEMY OF ECONOMIC STUDIES. DOCTORAL SCHOOL OF FINANACE AND BANKING. DISSERTATION PAPER. Student: RACARU IRINA Supervisor:MOISĂ ATLĂR, Ph.D. BUCHAREST, JULY 2001. The Effects of Fiscal Policy on Economic Growth. FISCAL POLICY. taxation
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The Effects of Fiscal Policy on Economic Growth ACADEMY OF ECONOMIC STUDIES DOCTORAL SCHOOL OF FINANACE AND BANKING DISSERTATION PAPER Student: RACARU IRINA Supervisor:MOISĂ ATLĂR, Ph.D BUCHAREST, JULY 2001
The Effects of Fiscal Policy on Economic Growth FISCAL POLICY • taxation • government spending ECONOMIC GROWTH • neoclassic • endogenous
The Effects of Fiscal Policy on Economic Growth CONDITIONAL CONVERGENCE
The Effects of Fiscal Policy on Economic Growth 1. THE EFFECTS OF TAXATION 2. THE EFFECTS OF GOVERNMENT SPENDING
The Effects of Fiscal Policy on Economic Growth with and for
The Effects of Fiscal Policy on Economic Growth THE EMPIRICAL EVIDENCE • cross section • pool Barro(1990) - negative effect of the government consumption Easterly and Rebelo (1993) - pozitive effect of the public investment
The Effects of Fiscal Policy on Economic Growth The variables: Source: World Bank Indicators
The Effects of Fiscal Policy on Economic Growth The Augmented Dickey Fuller test
The Effects of Fiscal Policy on Economic Growth MIDDLE LOW 0.10 0.10 0.08 0.05 0.06 0.00 LOGGDPGRUSD 0.04 LOGGDPGRUSD -0.05 0.02 -0.10 0.00 -0.15 -0.02 -5 -4 -3 -2 -1 0 -4 -3 -2 -1 0 LOGPBLINV LOGPBLINV 0.10 0.10 0.08 0.05 0.06 0.00 LOGGDPGRUSD 0.04 LOGGDPGRUSD -0.05 0.02 -0.10 0.00 -0.15 -0.02 -4 -3 -2 -1 0 -4 -3 -2 -1 0 LOGCONS LOGCONS
The Effects of Fiscal Policy on Economic Growth THE EFFECTS OF GOVERNMENT SPENDING ON INDUSTRIAL PRODUCTION - The Romanian Case The variables: Source: National Bank of Romania
The Effects of Fiscal Policy on Economic Growth The Augmented Dickey Fuller test
The Effects of Fiscal Policy on Economic Growth For the PROD-INV relation: The Johansen cointagration test
The Effects of Fiscal Policy on Economic Growth PRODt = 2,211·INVt + ut (29,06) ΔPRODt = -0,132·ΔPRODt-1 - 0,083·ΔPRODt-2 -0,049·ΔINVt-1 (-1,769) (1,074) (-2,530) - 0,080·ΔINVt-2 -0,122·SEAS(12) - 0,004·ut-1 + εt (-5,065) (-6,690) (-0,481) ΔINVt = 1,302·ΔPRODt-1 + 0,212·ΔPRODt-2 -0,404·ΔINVt-1 (3,705) (0,581) (-4,375) - 0,667·ΔINVt-2 +0,483·SEAS(12) +0,154·ut-1 + εt (-3,573) (5,592) (3,665)
The Effects of Fiscal Policy on Economic Growth For 5 years
The Effects of Fiscal Policy on Economic Growth For the PROD - INVEST, CONS relation: The Johansen cointagration test
The Effects of Fiscal Policy on Economic Growth PRODt = 1,041·INVESTt +0,668·CONSt+ ut (11,69) (8,244) ΔPRODt = -0,092·ΔPRODt-1 -0,033·ΔPRODt-2 -0,054·ΔINVESTt-1 (-1,185) (-0,432) (-2,473) - 0,079·ΔINVESTt-2 -0,056·CONSt-1 -0,039·CONSt-2 (-4,394) (-2,305) (-1,726) -0,122·SEAS(12) - 0,033·ut-1 + εt (-6,874) (-1,655)
The Effects of Fiscal Policy on Economic Growth ΔINVESTt = 0,836·ΔPRODt-1+0,237·ΔPRODt-2 -0,264·ΔINVESTt-1 (2,344) (0,668) (-2,637) - 0,185·ΔINVESTt-2 -0,011·CONSt-1 +0,053·CONSt-2 (-2,240) (-0,103) (0,501) +0,439·SEAS(12) + 0,435·ut-1 + εt (5,409) (4,816) ΔCONSt = 0,601·ΔPRODt-1 +0,379·ΔPRODt-2 +0,149·ΔINVESTt-1 (2,290) (1,450) (2,026) +0,142·ΔINVESTt-2 -0,642·CONSt-1 -0,517·CONSt-2 (2,340) (-7,806) (-6,689) +0,380·SEAS(12) +0,214·ut-1 + εt (6,374) (3,219)
The Effects of Fiscal Policy on Economic Growth Response to One S.D. Innovations For 5 years