A0679
Title: Optimal fiscal policies in booms and in recessions: An econometric case study for Slovenia
Authors: Reinhard Neck - Alpen-Adria Universitaet Klagenfurt (Austria) [presenting]
Dmitri Blueschke - University of Klagenfurt (Austria)
Klaus Weyerstrass - Institute for Advanced Studies Vienna (Austria)
Abstract: Optimal fiscal policies for the next few years are determined for Slovenia under alternative assumptions about global development. In particular, we distinguish between a scenario of a recession (assuming the recent Covid-19 crisis continues over a considerable period) and a scenario of the boom (assuming that the crisis is over by summer 2022). We use the macroeconometric model SLOPOL11 and assume an intertemporal objective function for Slovenian policymakers containing output, unemployment, inflation, the budget deficit, public debt, and the current account as the main arguments. Using the OPTCON algorithm, approximately optimal policies are calculated under both scenarios. It turns out that the design of fiscal policies is rather similar in both cases, showing the relatively low effectiveness of the fiscal instruments with respect to their influence on the small open economy within the Euro Area.
