Uncertainty and the Transmission of Fiscal Policy

AbstractThis article provides new evidence for the impact of fiscal policy shocks in Romania, using a dataset of fiscal variables for the period 2000q1 – 2014q1. When studying the effects of fiscal policy and uncertainty, a challenge is represented by the identification of the shocks. There are several ways to identify fiscal policy shocks. One approach is the one used in this paper. I used structural vector autoregression model (SVAR) that is a system of simultaneous equations. The baseline model includes GDP and expenditure, while the second model includes in addition an index used as proxy for market volatility