Macroeconomic Policies for Slovenia in the “Great Recession”

Neck, Reinhard and Blueschke, Dmitri and Weyerstrass, Klaus (2012) Macroeconomic Policies for Slovenia in the “Great Recession”. International Advances in Economic Research, 18 (4), pp. 345-366.

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Abstract or Table of Contents

The paper analyzes the effects of different reactions of fiscal (and to some extent monetary) policies to the Great Recession in Slovenia. We use the model SLOPOL8.1, an econometric model of the Slovenian economy, to simulate the effects of the global crisis under the assumption of no-policy reactions, i.e. assuming that macroeconomic policies are conducted without attempting to deal with the effects of the recession. Moreover, we investigate whether (and if so, how) fiscal policy can reduce or even annihilate the macroeconomic effects of the recession. It turns out that in order to achieve reasonable rates of growth and of unemployment, a highly expansionary design of fiscal policies is required, which is neither realistic nor sustainable. There are strong trade-offs between countercyclical fiscal policies and the requirements of fiscal solvency. Acceptable fiscal policies are mildly countercyclical and are not able to shelter the Slovenian economy from the negative effects of a slump like that occurring during the Great Recession. (author's abstract)

Item Type: Article in Academic Journal
Keywords: macroeconomics, fiscal policy, economics of transition, Slovenia, crisis, public debt
Classification Codes (e.g. JEL): E50, E62, O57
Status: Published
Date Deposited: 22 Jul 2015 11:49
Last Modified: 01 Apr 2016 14:20
URI: http://irihs.ihs.ac.at/id/eprint/3554

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