Dealing with the COVID-19 pandemic in Slovenia: simulations with a macroeconometric model

In this paper we analyse the effectiveness of fiscal policies with respect to macroeconomic stabilisation during the COVID-19 pandemic in the small open economy of Slovenia. Using SLOPOL11, an econometric model of the Slovenian economy, we simulate the development of the its economy during the 2020s...

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Bibliographic Details
Published in:Empirica 2023-11, Vol.50 (4), p.853-881
Main Authors: Weyerstrass, Klaus, Blueschke, Dmitri, Neck, Reinhard, Verbič, Miroslav
Format: Article
Language:English
Subjects:
Coronaviruses
COVID-19
Econometrics
Economic conditions
Economic crisis
Economics
Economics and Finance
Employment
European Integration
Eurozone
Fiscal policy
GDP
Government spending
Great Recession
Gross Domestic Product
Industrial Organization
International Economics
Macroeconomics
Macroeconomics/Monetary Economics//Financial Economics
Original Paper
Pandemics
Public Finance
Side effects
Simulation
Small & medium sized enterprises-SME
Supply & demand
Supply-side economics
Transition economies
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Summary:In this paper we analyse the effectiveness of fiscal policies with respect to macroeconomic stabilisation during the COVID-19 pandemic in the small open economy of Slovenia. Using SLOPOL11, an econometric model of the Slovenian economy, we simulate the development of the its economy during the 2020s under alternative assumptions about future pandemic-related shocks. We also determine optimal fiscal policies to combat the effects of the pandemic and to stabilise the economy under two scenarios for the future course of developments under COVID-19. 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. Successful stabilisation policies should thus contain a supply-side component in addition to a demand-side component.
ISSN:0340-8744
1573-6911
DOI:10.1007/s10663-023-09591-y