Procyclicality, Fiscal Dominance, and the Effectiveness of Fiscal Policy in Egypt
18 Pages Posted: 14 Feb 2012
Date Written: March 29, 2007
Abstract
This paper uses Structural Vector Autoregressive (SVAR) models to study the effectiveness of fiscal policy in stabilizing the real GDP. To do so, it first addresses the cyclicality of fiscal policy in Egypt since the early 1980s. Then, it tackles the fiscal dominance. Once the stage is prepared, it moves on to investigate the effectiveness of the fiscal policy. The paper concludes that the relationship between the fiscal policy and the economic activity is very week and it goes from the former to the later while the relationship between the fiscal policy and the monetary policy is strong and it also goes from the former to the later. This aggravated the economic instability and made the economy more prone to a boom-bust cycle
Keywords: Procyclicality, Fiscal dominance, SVAR
JEL Classification: C32, E62, E63
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Costly Capital Reallocation and the Effects of Government Spending
-
What are the Effects of Fiscal Policy Shocks?
By Harald Uhlig and Andrew Mountford
-
What are the Effects of Fiscal Policy Shocks?
By Andrew Mountford and Harald Uhlig
-
What are the Effects of Fiscal Policy Shocks?
By Andrew Mountford and Harald Uhlig
-
Understanding the Effects of Government Spending on Consumption
By Jordi Galí, David Lopez-salido, ...
-
Understanding the Effects of Government Spending on Consumption
By Jordi Galí, David Lopez-salido, ...