Αρχική Σελίδα Αρχική Σελίδα
  Rss Feeds

DISCRETIONARY FISCAL POLICY AND ECONOMIC ACTIVITY IN GREECE

 

 

 

 

Athanasios O. Tagkalakis

Bank of Greece,

 

Abstract

This paper investigates the effects of discretionary fiscal policy changes on economic activity and its subcomponents in Greece in the period 2000-2011. Changes in government spending and net taxes have Keynesian effects. An increase in government consumption has the most pronounced positive effects on output growth, private consumption and non-residential investment, while it reduces residential investment. Cuts in the public investment programme crowd in private investment, but are associated negatively with the net exports ratio. Both indirect and direct tax hikes lower private consumption, private investment and output growth. Additionally, higher direct taxes, by lowering disposable income, reduce import demand, thus, improving the trade balance.

Keywords: Discretionary fiscal policy; economic growth; consumption; investment; net exports

JEL Classification: E62, O52, H30

 

Acknowledgements: I would like to thank the Fritz Breuss, Heather Gibson and two anonymous reviewers for the very helpful comments and suggestions. The views expressed here are those of the authors and should not be taken to reflect those of the Bank of Greece. The usual disclaimer applies.

 

 

 

Correspondence:

Athanasios O. Tagkalakis

Bank of Greece,

21, El. Venizelos Ave.

10250 Athens, Greece

Tel.:0030-210-3202442

Fax: 0030-210-3232025

Email: atagkalakis@bankofgreece.gr


Πλήρες Κείμενο