Do Financial Arrangement of the International Monetary Fund Has Impact on the Reduction of Government Spending, Evidence through Political Fiscal Cycles, the Case of Croatia

Ivana Rukavina

Abstract


This paper examines the regulatory role of the IMF on government spending through political fiscal cycles. According to theoretical views, the fiscal policy in the pre-election period reflects an increase in government spending or budget expenditures; in postelection period, it takes a restrictive course by reducing spending. In the presence of a contractual agreement with the IMF, the theory points to limiting and reducing the magnitude of government spending in the pre-election period. According to the research results in Croatia, there is an increase in government spending in the election quarter, and its decrease in the quarter after the election. On the other hand, the contractual arrangements with the IMF show significant reductions in government spending. When a country is under a contractual obligation with the IMF, it reduced the government spending in the pre-election period in relation to the period when it is not under a contractual obligation.


Full Text:

PDF


DOI: http://dx.doi.org/10.22158/jepf.v4n2p143

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Ivana Rukavina

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Copyright © SCHOLINK INC.   ISSN 2377-1038 (Print)    ISSN 2377-1046 (Online)