Research :: Croatian Science Foundation Projects
On July 13, 2018, the Institute of Public Finance hosted a presentation of results from the research project Channels and effectiveness of fiscal devaluations, financed by the Croatian Science Foundation. Fiscal devaluation is a tax policy instrument that should mimic the effects of nominal exchange rate devaluation, i.e. improve external competitiveness and increase net exports of a devaluing country. In its basic form, it consists of a budget-neutral reduction in employers’ social security contribution rate and an increase in the value added tax. This research tried to fill some of the gaps in the existing literature and provide more reliable econometric estimates of the effectiveness of fiscal devaluations, along with exploring some specific channels through which fiscal devaluations are expected to work.
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