Economic activity, fiscal, and capital flow dynamics in Bulgaria 2007-2012: fiscal multiplier theory vs. “other things”

Ganev, Georgy (2019): Economic activity, fiscal, and capital flow dynamics in Bulgaria 2007-2012: fiscal multiplier theory vs. “other things”. Published in: Public Policy.Bg , Vol. 10, No. 2 (2019): pp. 90-96.

Abstract

When towards the end of 2008 the leading world economies found themselves in the grips of a severe global financial and economic crisis, their governments felt compelled to react. Most of them, especially in North America and Europe, did so by dramatic increases in government spending with two main goals: to bail our failing financial systems and to substitute dropping private demand with pumped-up public demand as a general support for the aggregate. At the same time central banks made large injections of liquidity to pump up the monetary base and thus counteract the severely contracting money multipliers – at the cost of putting on their balances assets of less than prime quality and thus in effect debasing the currencies of the respective economies.

• Item Type: MPRA Paper
• Language: English
• Keywords: fiscal policy; multiplier effect; capital flows; small open economy
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics

References

Blanchard, Olivier, and Daniel Leigh, “Growth forecast errors and fiscal multipliers”, IMF Working Paper No. 13/1, January 2013, at: https://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf

Paul Seabright, The Company of Strangers: A Natural History of Economic Life, Revised edition, Princeton, Princeton University Press, 2010, p. 10

Ziliak, Stephen T., and Deirdre N. McCloskey, “The Cult of Statistical Significance: How the Standard Error Costs Us Jobs, Justice and Lives.” Ann Arbor: University of Michigan Press, 2008