FISCAL MULTIPLIERS IN THE MACEDONIAN ECONOMY COMPARED TO SELECTED EU MEMBER STATES – ASSESSMENT USING THE VAR MODEL

The objective of this paper is to assess the effects of fiscal multipliers in the Macedonian economy and compare them with three selected European Union member states: the Republic of Slovenia, the Republic of Croatia, and the Republic of Bulgaria. We found that the fiscal multipliers of total public expenditures in the Republic of North Macedonia, the Republic of Slovenia, and the Republic of Bulgaria are positive but still very low, even insignificant. In contrast, the fiscal multipliers in the Republic of Croatia are negative. On the revenue side, the findings for the Republic of North Macedonia, the Republic of Slovenia, and the Republic of Bulgaria indicate that every increase in tax revenues leads to reduced economic activity, which, however, is not the case in the Republic of Croatia. Moreover, this paper includes an additional calculation of the multiplier effects of government consumption (including wages, compensations, and expenditures on goods and services), capital expenditures and transfers specifically for the Republic of North Macedonia. Transfer multipliers exhibit increasing positive effects throughout the quarters, whereas the effects of government consumption and capital expenditures are very low and, in some quarters, even negative. The results indicate that the government needs to conduct more efficiently fiscal policy by raising public revenues and managing their expenditure.