OECD Economics Department Working Papers

ISSN :
1815-1973 (en ligne)
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.

 

Non-Keynesian Effects of Fiscal Consolidation

An Analysis with an Estimated DSGE Model for the Hungarian Economy You or your institution have access to this content

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Auteur(s):
Szilárd Benk1, Zoltán M. Jakab1
Author Affiliations
  • 1: OCDE, France

Date de publication
09 mars 2012
Bibliographic information
N°:
945
Pages
51
DOI
10.1787/5k9d195t38mv-en

Cacher / Voir l'abstract

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.
Mots-clés:
non-Keynesian effects, taxation, fiscal consolidation, government expenditure, DSGE model
Classification JEL:
  • E27: Macroeconomics and Monetary Economics / Macroeconomics: Consumption, Saving, Production, Employment, and Investment / Forecasting and Simulation: Models and Applications
  • E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy
  • H30: Public Economics / Fiscal Policies and Behavior of Economic Agents / General
  • H50: Public Economics / National Government Expenditures and Related Policies / General