OECD Economics Department Working Papers

ISSN: 
1815-1973 (online)
DOI: 
10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

A Simple Fiscal Stress Testing Model

Case Studies of Austrian, Czech and German Economies You or your institution have access to this content

English
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Author(s):
Ondra Kamenik1, Zdenek Tuma1, David Vavra1, Zuzana Smidova2
Author Affiliations
  • 1: OGResearch, Czech Republic

  • 2: OECD, France

01 July 2013
Bibliographic information
No.:
1074
Pages:
61
DOI: 
10.1787/5k43nxm8hfvf-en

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This paper develops a simple model-based framework for stress testing fiscal consolidation strategies under different scenarios of future shocks. A baseline scenario assuming a gradual debt consolidation is presented and by assuming different future developments (e.g. lower potential growth) and/or model specification in terms of a fiscal rule confidence bands around the baseline are obtained. Trade-offs between costs and benefits are evaluated, in terms of cumulative output loss and primary surpluses, as well as political difficulty of fiscal strategies and risk of failed consolidation. The model is applied to Austria, Czech Republic and Germany. This working paper relates to the 2013 OECD Economic Surveys of Austria, Czech Republic and Germany. (www.oecd.org/eco/surveys)
Keywords:
fiscal policy, structural deficit, debt consolidation, Central Europe
JEL Classification:
  • E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy
  • E63: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy
  • E65: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Studies of Particular Policy Episodes
 
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