THE FISCAL SPACE IN THE WESTERN BALKANS - Evidence from the recent

The main purpose of this study, however, is to assess the effects of the Energy and Food Price Crisis1 on the fiscal space of the WB6, through 1 Within the scope of the study, we use the terms ‘Energy and Food Price Crisis’ and ‘Energy Crisis’ interchangeably, as both refer to the same crisis period starting from the end of 2021 up until late 2023. [...] THE FISCAL SPACE AND THE FISCAL STIMULUS DURING CRISIS IN THE WESTERN BALKANS 6 3.1 OVERVIEW OF THE LITERATURE The economic crisis that started during the COVID-19 pandemic, followed by the Ukraine-Russia conflict and the rising prices of food and energy, put an emphasis on the fiscal policy as a tool for stirring collapsed demand. [...] The fiscal space in the Western Balkans - Evidence from the recent multilayer crisis 21 After the outbreak of the recent crises: the Global Financial Crisis 2008-2010, the European Sovereign Crisis 2011-2013, the Pandemic of Covid-19 2020-2021 and the Energy and Food Price Crisis 2022-2023, many economists analyzed the relationship between the fiscal space and the size of the fiscal stimulus provi. [...] 22 The fiscal space in the Western Balkans - Evidence from the recent multilayer crisis 3.2 METHODOLOGY AND DATA The objective of the analysis is to understand if fiscal space in the WB6 before crisis struck played important role for the fiscal stimuli that governments used as weapons to combat the contraction of the economy caused by the crisis. [...] Moreover, the calculation properly finds that the two top ranked years over the period 2003-2022 based on the amount of the fiscal stimulus are clearly the pandemic year of 2020, and either the hardest-hit year of the Global Financial Crisis (2008-2010), or of the European Sovereign Crisis (2011-2013).