The Size of the Fiscal Stimulus in European Countries

Zdravković, Aleksandar and Kamenković, Sandra and Kaličanin, Tijana (2022) The Size of the Fiscal Stimulus in European Countries. In: Economic and Financial Implications of Covid-19 Crises. Université Côte d'Azur, Nica, pp. 69-91. ISBN 978-2-493478-00-9

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Abstract

In this, we discuss and assess the size of the fiscal stimulus in European countries. To this end, we developed a simple methodological framework for the estimation of fiscal stimulus as a discretionary component of fiscal balance, relying on the information in the IMF World Economic Outlook database. Decomposition of fiscal balances indicates that discretionary component exceeded cyclical component in most European countries, implying that European countries did well in mitigating economic fallout. In addition, we compared estimated fiscal stimuli with above-the-line measures announced or taken in 10 selected European countries. Our findings show that the difference between estimated stimulus and measures announced or taken can be huge, which is a puzzling result and a potential subject for future research.

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