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Fiscal Response to the COVID-19 Shock in Croatia

In this paper, we analyse the effects of the COVID-19 shock on fiscal developments in Croatia. In the first part of the paper, we analyse the effects of adverse economic developments and discretionary policy measures on different (structural) fiscal indicators. In addition, we evaluate the evolution of fiscal space in Croatia before and during the COVID-19 crisis. In the second part of the paper, we analyse the policy response to this exogenous shock by fiscal policy makers and compare the size and structure of instruments used with other EU countries. Our analysis shows that fiscal policy makers in Croatia relied primarily on the so-called direct “above-the-line” fiscal measures and that fiscal response in Croatia was powerful in local terms but relatively modest compared to other EU countries.

fiscal policy ; COVID-19 crisis ; Croatia

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