FISCAL IMPACTS ON OUTPUT IN A SMALL OPEN ECONOMY: THE CASE OF ALBANIA

Nikolay Patonov

Abstract


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.


Keywords


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

JEL Codes


G38; H21

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References


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DOI: http://dx.doi.org/10.1515/aicue-2016-0013

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