How Should Slovenia Design Fiscal Policies in the Government Debt Crisis?

We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that t...

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Bibliographic Details
Published in:Emerging markets finance & trade 2016-01, Vol.52 (7), p.1562-1573
Main Authors: Blueschke, Dmitri, Weyerstrass, Klaus, Neck, Reinhard
Format: Article
Language:English
Subjects:
crisis
Deficit financing
Econometrics
Economic crisis
Economic stabilization
Effectiveness studies
Fiscal policy
macroeconomics
Policy making
public debt
Slovenia
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Summary:We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that the optimal design of fiscal policies is rather close to the austerity course as detailed in the Slovenian Stability Program, revealing 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.
ISSN:1540-496X
1558-0938
DOI:10.1080/1540496X.2016.1158549