Original scientific paper

https://doi.org/10.18045/zbefri.2019.2.527

Effects of fiscal consolidation in Western Balkan Countries

Milenko Krajišnik ; University of Banja Luka, Faculty of Economics
Dragan Gligorić orcid.org/0000-0002-7171-8699 ; University of Banja Luka, Faculty of Economics
Biljana Gojković orcid.org/0000-0003-3297-948X ; iscal Council of the Republic of Srpska

Abstract

The global economic crisis has not spared the countries of the Western Balkans. The ensuing recession, characterized by a decline in economic activity, a decline in consumption and an increase in unemployment, went hand in hand with drops in public revenues. This in turn resulted in budget imbalances that manifested in structural budget deficits and higher public debt. Fiscal consolidation was deemed necessary across the board. In this process, certain fiscal policy elements varied among countries. The structure of public revenues and public expenditures changed. The question is whether the fiscal consolidation was successful and to what extent. Dynamic panel analysis using PMG estimator in six Western Balkan Countries for the period 2004-2016 has shown that fiscal consolidation has positive impact on economic growth in this region. So, Western Balkan Countries have to conduct responsible public finances in order to encourage economic growth.

Keywords

GDP; budget deficit; fiscal consolidation

Hrčak ID:

231295

URI

https://hrcak.srce.hr/231295

Publication date:

27.12.2019.

Article data in other languages: croatian

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