Nikolay Patonov


The paper is intended to study the effects of total government spending and tax revenue on the annual GDP growth rate inAlbania. On this base, we can examine whether and to which extent the macroeconomic governance could rely on those fiscal instruments in terms of a small open economy. The empirical methodology is based on regression analysis which includes OLS estimation on simply specified regression model and Vector Autoregressive estimates. The results support the assumptions that government expenditure is a weak instrument for policy impacts and the government must rely on taxation to stimulate economic growth.


tax revenues, government spending, economic growth, small open economy

JEL Codes

G38; H21

Full Text:



Arnold, J., 2008. Do Tax Structure Affect Aggregate Economic Growth? Empirical Evidence from a Panel of OECD Countries Vol. 643. (pp. 29). DOI:

Barro, R. J., 1990. Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5 Part 2), S103-S125. DOI:

Durmishi, A., 2015. Albania's Fiscal Goals, Budgetary Balance, Government Debt. Anglisticum Journal (IJLLIS), 4(9-10), 136-140.

Gray, C., Lane, T., and Varoudakis, A. (Eds.), 2007. Fiscal policy and Economic Growth, Lessons for Eastern Europe and Central Asia. Washington, DC: The World Bank.

Ilzetzki, E., 2011. Fiscal Policy and Debt Dynamics in Developing Countries Policy Research working paper. Washington, DC: World Bank.

Ilzetzki, E., Mendoza, E. G., and Végh, C. A., 2011. How Big (Small?) Are Fiscal Multipliers? IMF Working Paper. Washington: International Monetary Fund.

Kneller, R., Bleaney, M. F., and Gemmell, N., 1999. Fiscal Policy and Growth: evidence from OECD Countries. Journal of Public Economics, 74, 171-190.

Ministry of Finance of Albania, 2013. Fiscal indicators (January – December, 2013).

Muir, D., and Weber, A., 2013. Fiscal Multipliers in Bulgaria: Low But Still Relevant. IMF Working Paper, WP/13/49.

Myles, G. D., 2007. Economic Growth and the Role of Taxation. Paper prepared for the OECD under contract CTPA/CFA/WP2 (2006) 31.

Ramanathan, R., 1995. Introductory econometrics with applications (3 ed.). San Diego, US: University of California.

Romer, C. D., and Romer, D. H., 2007. The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks. National Bureau of Economic Research Working Paper, WP13264.

Romer, C. D., and Romer, D. H., 2010. The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks. American Economic Review, 100(3), 763-801. DOI:

Stoilova, D., and Patonov, N., 2013. An Empirical Evidence for the Impact of Taxation on Economy Growth in the European Union Tourism and management studies (Vol. 3, pp. 1030-1039).

Todorov, I. K., 2014. Macroeconomic Trends in the New Member Countries of the European Union before the Euro Area Debt Crisis. Scientific Annals of the "Alexandru Ioan Cuza" University of Iași, Economic Sciences, 61(2), 197-217.



  • There are currently no refbacks.