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.
 

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

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