The Impact of German Fiscal Policy on Economic Growth of Austria
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The existing literature implies that there is no consensus about the impact of fiscal measures on economic growth of neighbouring country, i.e. fiscal spillover effects. This study examines the role of German government spending on Austrian economic growth employing an autoregressive distributed lag (ARDL) model for empirical analysis, based on the McCombie-Thirlwall growth model as a theoretical framework, using the annually data during 1980-2014. The empirical results indicate that a 1 per cent increase in German government spending raises the growth rate of real GDP of Austria by 0.37 per cent. The Granger causality tests affirm that the spending of Germany’s government affects economic growth of Germany through domestic expenditure multiplier. And the change in income (GDP) of Germany in turn leads to an increase in exports from Austria to Germany. The ‘linked foreign multiplier effect’, associated with the increase in exports of Austria to Germany, induces the economic growth of Austria, consequently.
Abstract
The existing literature implies that there is no consensus about the impact of fiscal measures on economic growth of neighbouring country, i.e. fiscal spillover effects. This study examines the role of German government spending on Austrian economic growth employing an autoregressive distributed lag (ARDL) model for empirical analysis, based on the McCombie-Thirlwall growth model as a theoretical framework, using the annually data during 1980-2014. The empirical results indicate that a 1 per cent increase in German government spending raises the growth rate of real GDP of Austria by 0.37 per cent. The Granger causality tests affirm that the spending of Germany’s government affects economic growth of Germany through domestic expenditure multiplier. And the change in income (GDP) of Germany in turn leads to an increase in exports from Austria to Germany. The ‘linked foreign multiplier effect’, associated with the increase in exports of Austria to Germany, induces the economic growth of Austria, consequently.
참고문헌 (37)
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