Optimal Exchange Rate and Fiscal Policies for Slovenia on its Way into the Euro Area

Neck, Reinhard and Haber, Gottfried and Weyerstrass, Klaus (2012) Optimal Exchange Rate and Fiscal Policies for Slovenia on its Way into the Euro Area. Managing Global Transitions, 10 (3). pp. 231-243.

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Abstract or Table of Contents

This paper analyzes the design of macroeconomic policies for Slovenia on its way into the Euro Area. We simulate different policy scenarios, distinguishing in particular between different exchange rate regimes. For this purpose, we use the model SLOPOL4, a macroeconometric model for Slovenia. We determine ‘optimal’ exchange rate and fiscal policies for Slovenia as solutions of optimum control problems with a quadratic objective function and the model SLOPOL4 as a constraint. Several optimization experiments are carried out under different assumptions under a fixed exchange rate, a flexible exchange rate and a crawling peg regime approximating Slovenia’s entry into the Euro Area. The sensitivity of the results is examined with respect to several assumptions.

Item Type: Article in Academic Journal
Additional Information: Managing Global Transitions is an open access journal distributed under the terms of the Creative Commons CC BY-NC-ND 4.0 License.
Keywords: optimal control, econometric model, macroeconomic policy, Slovenia, sensitivity analysis
Classification Codes (e.g. JEL): E5, E6, C5, O5
Status: Published
Related URLs:
Date Deposited: 22 Jul 2015 11:48
Last Modified: 01 Apr 2016 14:20
URI: http://irihs.ihs.ac.at/id/eprint/3553

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