Abstract

This article aims to identify the applied strategies for discretionary fiscal changes–fiscal adjustments and fiscal expansions–for the period 1990-2011 in ex-communist European Union countries. Using data for fiscal adjustments (improvement of the budget balance) and for fiscal expansions (deterioration of the budget balance), there are analysed the strategies that led to this change in fiscal policy indicators and their impact on the economic activity.

The database contains 1990-2011 period and consists in macroeconomic indicators which reflect the fiscal policy (public revenues, public expenditures, public budget balance, general government consolidated gross debt), economic growth (GDP per capita, output gap) and fiscal adjustment process (size, proportion obtained by decreasing expenditure to GDP, proportion obtained by rising revenues to GDP, and dummy variables for need, success, gradual, expenditure based).

In order to identify the characteristics of the fiscal policy adjustments and their effects on the economic growth, we apply cluster analysis, graphic analysis, statistical indicators, and logit models. The obtained results of these methods are useful for evaluating the strategies used for diminishing / extending the deficit and to identify the determinant factors for the adjustment’s success.

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