Open AccessDo Financial Arrangement of the International Monetary Fund Has Impact on the Reduction of Government Spending, Evidence through Political Fiscal Cycles, the Case of Croatia
Author(s) -
Ivana Rukavina
Publication year - 2018
Publication title -
journal of economics and public finance
Language(s) - English
Resource type - Journals
eISSN - 2377-1046
pISSN - 2377-1038
DOI - 10.22158/jepf.v4n2p143
Subject(s) - government spending , economics , obligation , government (linguistics) , politics , quarter (canadian coin) , limiting , monetary economics , fiscal policy , economic policy , political science , market economy , welfare , law , mechanical engineering , linguistics , philosophy , archaeology , history , engineering
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.