Suchergebnisse

In this paper, we present an application of the dynamic tracking games framework to a monetary union. We use a small stylized nonlinear three-country macroeconomic model of a monetary union to analyze the interactions between fiscal (governments) and monetary (common central bank) policy makers, assuming different objective functions of these decision makers. Using the OPTGAME algorithm, we calculate solutions for several games: a noncooperative solution where each government and the central bank play against each other (a feedback Nash equilibrium solution), a fully-cooperative solution with all players following a joint course of action (a Pareto optimal solution) and three solutions where various coalitions (subsets of the players) play against coalitions of the other players in a noncooperative way. It turns out that the fully-cooperative solution yields the best results, the noncooperative solution fares worst and the coalition games lie in between, with a broad coalition of the fiscally more responsible countries and the central bank against the less thrifty countries coming closest to the Pareto optimum.

In this paper, we investigate how fiscal policies should look like in a country like Slovenia. Slovenia's present situation is characterized by high and rapidly increasing public debt and low growth. It is an interesting case because it is one of the few small open economies from Central and Eastern Europe that was already in the Euro Area before the "Great Recession". Using the SLOPOL model, an econometric model of the Slovenian economy, we analyse the effects of different fiscal policies in Slovenia over the next couple of years by means of simulations. In particular, we determine optimal fiscal policies for Slovenia over the next few years. Using the OPTCON algorithm, we calculate approximately optimal fiscal policies under different scenarios. We show that an optimal design of fiscal policies depends essentially on the political preferences of Slovenian policy makers. Moreover, the simulations and optimizations reveal the small scope of possible alternative fiscal stabilization policies available due to the relatively low effectiveness of the fiscal instruments with respect to their influence on the business cycle in the Slovenian economy. (author's abstract)

AbstractIn this paper, we examine the sensitivity of the results of an earlier paper which presented and analyzed a dynamic game model of a monetary union with coalitions between governments (fiscal policy makers) and a common central bank (monetary policy maker). Here we examine alternative values of the parameters of the underlying model to show how the earlier results depend on the numerical parameter values chosen, which were obtained by calibration instead of econometric estimation. We demonstrate that the main results are qualitatively the same as in the original model for plausible smaller and larger values of the parameters. For the few cases where they differ, we interpret the deviations in economic terms and illustrate the policies and their macroeconomic effects resulting from the change to the parameter under consideration for one of these cases.

In this paper we analyse the effectiveness of demand- and supply-side fiscal policies in the small open economy of Slovenia. Simulating the SLOPOL10 model, an econometric model of the Slovenian economy, we analyse the effectiveness of various categories of public spending and taxes during the period 2020 to 2030, assuming that no crisis occurs. Our simulations show that those public spending measures that entail both demand- and supply-side effects are more effective at stimulating real GDP and increasing employment than pure demand-side measures. This is due to the fact that supply-side measures also increase potential and not only actual GDP. Measures which foster research and development and those which improve the education level of the labour force are particularly effective in this respect. Employment can also be stimulated effectively by cutting the income tax rate and the social security contribution rate, i.e. by reducing the tax wedge on labour income, which positively affects Slovenia's international competitiveness. Successful stabilisation policies should thus contain a supply-side component in addition to a demand-side component. We also provide a first simulation of potential effects of the Covid-19 crisis on the Slovenian economy, which is modelled as a combined demand and supply shock.

In this paper, we show that successful policy aimed at enhancing economic growth in the long run must be based on policies which improve human capital and technological progress. This is applied to Slovenia, a small open economy in the European Union and the Euro Area. In particular, we investigate how fiscal policies should be designed to support economic growth without violating the European Union Stability and Growth Pact. Using the SLOPOL10 model, an econometric model of the Slovenian economy, we analyse the effects of different fiscal policies in Slovenia over the next ew years by means of simulations. The fiscal policy multipliers of the Slovenian economy are small and short- ived, which renders demand-side expansionary fiscal policies nappropriate as a means of achieving higher growth. However, if an increase in government expenditures directly related to technological progress is implemented (such as better funding for tertiary education or subsidies for firms' investments in research and development), this can trigger a path of output which is permanently higher than that of the baseline simulation. Reducing income taxes and social security contributions has strong positive effects on employment. This result shows that the key to prosperity and sustained growth is investment in human capital and technology, also for a small open economy like Slovenia.