ABSTRACT
This study examines discretionary fiscal policy effects on output by employing a Panel VAR model in MENA countries during 1990–2018. the results demonstrate fiscal multipliers are larger when public debt is low, at a high institutional quality, and during recession periods. Contrary to empirical studies, we found the response of output to fiscal shocks is larger at a low level of financial development. Our findings have significant policy implications focusing on fiscal policy mix in downturns of an economy, lower levels of public debt, lower levels of financial development, and a higher level of institutional quality.
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Correction Statement
This article has been corrected with minor changes. These changes do not impact the academic content of the article.
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Notes on contributors
Somayeh Sedighi
Somayeh Sedighi, Ph.D. student in the Doctoral School of Economics at Faculty of Economics and Business Administration, University of Szeged, Hungary. Her research focuses on the political economy of development, with the emphasis on natural resources, foreign aid and remittances.
Samaneh Raiss Shaghaghi
Samaneh R. Shaghaghi, Ph.D. student in the Doctoral School of Economics at Faculty of Economics and Business Administration, University of Szeged, Hungary. Her primary research interest is in China’s Economics and Politics.
Gabriel Temesgen Woldu
Gabriel Temesgen Woldu, Ph.D. student in the Doctoral School of Economics at Faculty of Economics and Business Administration, University of Szeged, Hungary. His research interest is inclined towards development macroeconomics, environmental economics and financial econometrics.