In this paper a two-country static model is developed in order to analyze short-run fiscal multipliers and fiscal spillovers in a monetary union. Both countries are large open economies representing core and periphery countries in the Euro zone. This paper implements a structural VECM framework recognizing short-run and long-run cross-economy relationships in order to empirically investigate
the signs and magnitudes of the multipliers. Empirical analysis covers the period of 1979–2011 quarterly. The results demonstrate that domestic fiscal multipliers are positive but small suggesting that private consumption and investments might be crowded out. In addition, the domestic tax shocks have less impact on the output than the government spending shock. Effect on inflation is more significant. Cross border multipliers are also positive. Moreover, a spending spillover effect is larger than the spillover effect from a tax shock.
This paper studies fiscal policy in Russia 2004–2010 with the aid of structural budget balance and fiscal impulse measures. To check for robustness several methods estimating the potential GDP are employed. The research suggests a hypothesis that the output in Russia is subject to two types of shocks: persistent outward shocks and short-term internal shocks. In 2004–2010, fiscal policy coped with the internal shocks but could not smooth outward instability. Fiscal policy in Russia is procyclical; it does not stabilize the output.
This article uses co-integration and related techniques to test for a long-run causal relationship between the fiscal and external deficits of three post-transition countries in Central and Eastern Europe. In addition, an import propensity model is tested by applying OLS and GMM. All theresults reject the Twin Deficits Hypothesis. Instead, the resultsdemonstrate that specific transition factors such asa high import intensity of exports and net capital inflows affect the trade balance.