Non-Keynesian Effects of Fiscal Consolidation [E-Book]: An Analysis with an Estimated DSGE Model for the Hungarian Economy / Szilárd Benk and Zoltán Jakab
Using an estimated DSGE model for Hungary, the paper identifies the possible non-Keynesian channels through which a fiscal consolidation may manifest as expansionary. Simulations show that fiscal consolidation policies are typically contractionary. Nevertheless, taking into account some specific fea...
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Full text |
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Personal Name(s): | Benk, Szilárd. |
Jakab, Zoltán. | |
Imprint: |
Paris :
OECD Publishing,
2012
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Physical Description: |
51 p. ; 21 x 29.7cm. |
Note: |
englisch |
DOI: |
10.1787/5k9d195t38mv-en |
Series Title: |
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OECD Economics Department Working Papers ;
945 |
Keywords: |
Economics Hungary |
Using an estimated DSGE model for Hungary, the paper identifies the possible non-Keynesian channels through which a fiscal consolidation may manifest as expansionary. Simulations show that fiscal consolidation policies are typically contractionary. Nevertheless, taking into account some specific features of the Hungarian economy, there is a possibility that expansionary effects arise. These effects may take the form of a drop in interest rate risk premium or favourable balance sheet effects through the appreciation of the currency. However, the credibility of fiscal consolidation is key in achieving positive output effects. A non-credible consolidation is unlikely to expand output, regardless of the assumptions regarding the specific features of the economy, and regardless of the composition of a consolidation package. |