Symmetry of output effects of government expenditure and government revenue in Ukraine
Authors:
- Victor Shevchuk,
- Roman Kopych
Abstract
This paper empirically analyzes the effects of fiscal policy in Ukraine, using the vector error correction model (VECM). For quarterly data of the 2001-2016 period, we find a robust positive impact of both government expenditure and revenue upon output in Ukraine. Otherwise, the fiscal policy transmission mechanism exhibits several standard features (e.g., as an increase in government expenditure after a positive shock to government revenue or widening of the budget deficit following an interest rate hike). Our results reflect the prediction of the Mankiw Summers model that tax cuts could be restricted under (i) strong demand for money of consumption expenditure in comparison to the investment-based demand for money combined with (ii) significant interest rate elasticity of investments. The results suggest feasibility of revenue-based austerity policies in Ukraine, as higher tax rates and better tax collection may contribute to economic growth even in the short run. The findings also imply that the real exchange rate depreciation brings about a decline in output and a symmetrical decrease in either government revenue or government expenditure. Also, there is a rather strong inverse relationship between interest rate and output.
- Record ID
- CUT5318e73ad7e94bd48c7a73e0d3e03346
- Publication categories
- ; ;
- Author
- Pages
- 369-378
- Other elements of collation
- tab.; wykr.; Bibliografia (na s.) - 377-378; Oznaczenie streszczenia - Abstr.
- Book
- Papież Monika, Monika Papież Śmiech Sławomir Sławomir Śmiech (eds.): The 11th Professor Aleksander Zelias International Conference on Modelling and Forecasting of Socio-Economic Phenomena, May 9-12, 2017, Zakopane, Poland : conference proceedings, 2017, Cracow, Uniwersytet Ekonomiczny w Krakowie, Foundation of the Cracow University of Economics, ISBN 978-83-65173-85-0 (HTML)
- Keywords in English
- fiscal policy, interest rate, real exchange rate, the Mankiw Summers model, Ukraine
- URL
- http://pliki.konferencjazakopianska.pl/proceedings_2017/ Opening in a new tab
- Language
- eng (en) English
- License
- Score (nominal)
- 20
- Additional fields
- Indeksowana w: Web of Science
- Uniform Resource Identifier
- https://cris.pk.edu.pl/info/article/CUT5318e73ad7e94bd48c7a73e0d3e03346/
- URN
urn:pkr-prod:CUT5318e73ad7e94bd48c7a73e0d3e03346
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