THE EFFECTS OF FISCAL POLICY ON UNEMPLOYMENT AND ECONOMIC GROWTH: EVIDENCE FROM THE REPUBLIC OF NORTH MACEDONIA
Keywords:
public revenues, public expenditures, unemployment, economic growth, VARAbstract
For fulfilling the objectives of the economic growth, policy makers mostly rely on the effects of fiscal policy measures and instruments, to strive for its improvement and harmonization. In this regard, the main aim of this paper is investigation of the interrelationship and connection between the fiscal policy and its impact on the unemployment rate and economic growth, focusing the analysis in the Republic of North Macedonia. Since there is no universal model for the application of measures and instruments of fiscal policy and their combination, this paper highlights the application of the measures of these policies in developing countries such as the Republic of North Macedonia, in order to achieve financial stability. By applying the VAR technique, this paper analyzes the effects of the public revenues and expenditures on the unemployment rate and GDP growth in the Republic of North Macedonia for the time period 2000q1 2022q4. Finally, the results imply that fiscal policy has a significant effect on the economic growth of the Republic of North Macedonia, while there is no evidence for a significant nexus between unemployment rate and public revenues and expenditures in the Republic of North Macedonia.
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