IMPACT OF FISCAL POLICY ON GDP IN EU COUNTRIES OUTSIDE THE EUROZONE

The aim of this paper is to investigate the impact of fiscal policy shocks on GDP in six Central and Eastern European countries outside the Eurozone, i.e. Bulgaria, Croatia, the Czech Republic, Poland, Romania and Hungary. The study uses a structural vector autoregressive (SVAR) model with an identification scheme based on approach proposed by Blanchard and Perotti [2002], estimated separately for each country. The analyses are based on quarterly data. However, due to the data availability, figures for Poland and Croatia cover period 2002q1-2016q4, in case of Bulgaria and the Czech Republic - 2000q1-2016q4, for Hungary - 1999q1-2016q4, and in case of Romania - the period 1996q1-2016q4. The results indicate a positive reaction of GDP to structural spending shocks in each of the examined countries. The estimated maximum government spending multiplier ranged from 0.18 in Bulgaria to 0.76 in Poland. The impact of the structural revenue shock on GDP was initially negative in each of the countries examined, while the differences were observed between countries over the whole time horizon for which the impulse response function was investigated (16 quarters).