Linear and nonlinear panel regression models for fiscal policy evaluation

  • 1 Faculty of Economics and Business, University of Maribor, Razlagova 14, Maribor, Slovenia


In this paper, we analyse the relationship between the primary surplus/deficit and debt for the group of eleven Central and Eastern European EU countries. Temporary spending and temporary output are also added to the regression equation as explanatory variables. We use annual data for the period between 1997 and 2020, obtained from Eurostat. The estimated panel regression model passes the employed specification and diagnostic tests. Our analysis reveals there is a significant positive response of the primary surplus to an increase in debt, providing empirical support for the sustainability of fiscal policy in the observed panel of countries during the observed period.



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