Fiscal Policy and its Impacts on Stock Markets

Solving and eliminating the consequences of the global financial crisis brought in the centre of attention monetary policy tools, such as money supply, interest rates and inflation targeting. Due to the growth of government budget expenditures in individual countries that resulted into the European debt crisis, the needed changes in the tax policy and structure of government spending were postponed The aim of this paper is to demonstrate the positive effects of a tax system reform on the stock market, from the point of view of stock companies as well as stock market investors. It is also important to quantify the impacts of the changes in the structure of government expenditures on stock markets.