Journal of Tax Reform
Modelling of Fiscal and Monetary Policy Interactions in the Republic of Belarus
I. A. Loukianova, M. A. Shkliarova, S. Yu. Vysotsky
Belarusian State Economic University, Minsk, Belarus
Abstract
The article discusses classical and modern macroeconomic models of interaction of fiscal and monetary policies in Belarus. The hypothesis of this research is that the interaction of fiscal and monetary policies has a synergistic effect on economic growth and that at certain stages, one of these policies prevails over the other. This hypothesis was tested with the help of an IS-LM model, which was used to investigate the joint effects of monetary and fiscal policies on business activity in Belarus. A Markov switching model was developed in Eviews software to analyze the interaction between these policies. Regression dependences of the average tax burden (including the burden imposed by social security contributions) and GDP, investment and the refinancing rate were built by using Excel software. To solve the IS-LM model, the value of autonomous consumption was computed with the help of the adjusted value of the average propensity to consume. It was found that autonomous consumption is comparable with the budget of subsistence minimum in Belarus. The share of government spending in the GDP structure was on average 35.01%. The comparison of gross savings and investment showed that in the majority of periods, gross savings insignificantly exceeded the amount of investment, that is, the available funds were used for consumer lending rather than for investment. Analysis of the Markov switching model has led us to the conclusion that from the first quarter 2005 until the fourth quarter of 2009, the fiscal policy in Belarus was in the active regime. The passive fiscal policy regime was observed in the period between the first quarter of 2010 and the first quarter of 2019. In this period, a rise in the public debt was accompanied by an increase in the budget surplus. In the second quarter of 2019, there was a transition to a more active fiscal policy, which points to the need to intensify tax reforms.
Keywords
taxation system, tax reform, tax burden, fiscal policy, monetary policy, economic growth
JEL classification
H20, H21, E62References
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About Authors
Irina A. Loukianova – PhD in Economics, Associate Professor, Head of the Laboratory of Contemporary Problems of Taxation and Fiscal Policy, Belarusian State Economic University (26 Partizansky pr., Minsk, 220070, Belarus); ORCID: 0000-0002-6119-3761; e-mail: i.loukianova@taxprof.by
Maria A. Shkliarova – PhD in Economics, Associate Professor, Senior Researcher of the Laboratory of Contemporary Problems of Taxation and Fiscal Policy, Belarusian State Economic University (26 Partizansky pr., Minsk, 220070, Belarus); ORCID: 0000-0001-7013-3237; e-mail: m.shkliarova@taxprof.by
Stanislav Yu. Vysotsky – PhD in Economics, Associate Professor, Department of Statistics, Belarusian State Economic University (26 Partizansky pr., Minsk, 220070, Belarus); ORCID: 0000-0002-6049-7632; e-mail: visozkij@yandex.ru
For citation
Loukianova I. A., Shkliarova M. A., Vysotsky S. Yu. Modelling of Fiscal and Monetary Policy Interactions in the Republic of Belarus. Journal of Tax Reform. 2019;5(3):220–235. DOI: 10.15826/jtr.2019.5.3.069
Article info
Received October 31, 2019; Revised November 20, 2019; Accepted November 24, 2019
DOI: http://dx.doi.org/10.15826/jtr.2019.5.3.069
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