Estimating the Impact of Fiscal Consolidation on Economic Growth in Egypt.

نوع المستند : المقالة الأصلية

المؤلفون

1 Professor of Economics and Foreign Trade, Faculty of Commerce and Business Administration, Helwan University.

2 Economics and Foreign Trade, Faculty of Commerce and Business Administration, Helwan University.

المستخلص

This research aims at analyzing and estimating the impact of fiscal consolidation on economic growth in Egypt during the period from 1989 to 2019 using the ARDL and ECM model, with hypothesis states that fiscal consolidation has a positive impact on economic growth in Egypt. There is evidence from economic literature for the existence of expansionary (Non-Keynesian) effects of fiscal consolidation such as A. Alesina and S. Ardagna (1998) and F. Giavazzi and M. Pagano (1990).
The research concluded, through the economic analysis and econometric model, that the fiscal consolidation in Egypt affected economic growth positively, and this result is consistent with the evidences of expansionary effects of fiscal consolidation. The research presented some conditions that may contribute to the expansionary effects of fiscal consolidation on economic growth, such as its success in reducing the public debt to-GDP-ratio as well as reducing the budget deficit and achieving primary surplus, in addition to the composition of fiscal consolidation, as it is argued that fiscal consolidations that based on expenditure cuts are associated with expansionary effects more than those that based on tax increase.

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