Fiscal regime switches in Slovak economy: MS-VAR approach
| Authors | |
|---|---|
| Year of publication | 2017 |
| Type | Article in Proceedings |
| Conference | Hradec Economic Days 2017 |
| MU Faculty or unit | |
| Citation | |
| Web | http://fim2.uhk.cz/hed/images/KOMPLET_en_17.pdf |
| Field | Economy |
| Keywords | Fiscal policy; Markov-Switching VAR |
| Description | This paper investigates the switches in Slovak fiscal policy. Two regimes of fiscal policy were identified by Markov-Switching vector-autoregressive model. In the Regime 1, that lasts on average only for a half of year, the output responds to shocks in taxes and government spending in accordance with expectation: it increases as taxes revenue decreases and spending increases. To the contrary, the fiscal policy in the Regime 2, that is more frequent in the observed period, is non-functional according to the estimated model: the output does not react to impulses in taxes, neither spending. The model was estimated using quarterly time series of Slovak economy for the period 1999:3–2015:3. |
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