Proceedings of the 44th International Academic Conference, Vienna, 2018
In 2009, Serbia applied officially for EU membership, and on 21 January 2014, membership negotiat... more In 2009, Serbia applied officially for EU membership, and on 21 January 2014, membership negotiations started. If Serbia joins the EU, it will have to adopt the euro as legal tender as soon as it fulfils the relevant Maastricht criteria. By means of simulations with a macroeconometric model of the Serbian economy, this paper examines what macroeconomic effects can be expected from Serbia's EU membership and from its membership of the Euro Area. The macroeconometric model for Serbia comprises the key macroeconomic markets, i.e. the labor, goods, monetary and foreign exchange markets. It contains equations for GDP and its expenditure components (consumption of private households, government consumption, fixed capital formation, exports, and imports), the price level, wages, employment, unemployment, interest rates, and exchange rates. In addition, the government sector is modeled in some detail. It is shown that EU accession and the introduction of the euro bring about higher real GDP, more employment, and slightly higher inflation due to additional aggregate demand. Public finances are affected positively. The benefits of joining the Euro Area are mainly due to supply side effects, viz. increases in productivity.
In 2009, Serbia officially applied for European Union (EU) membership. In 2014, membership negoti... more In 2009, Serbia officially applied for European Union (EU) membership. In 2014, membership negotiations began. After joining the EU, Serbia will have to adopt the euro as legal tender as soon as it fulfils the relevant Maastricht criteria. So far, the quantitative consequences of such changes in the institutional framework on the macroeconomy and the major objective variables of Serbia (or another West Balkan country) have not been analyzed. In this paper, we examine likely macroeconomic effects from Serbia's membership in the EU and the Euro Area by means of simulations with a macroeconometric model of the Serbian economy. We show that EU accession and the introduction of the euro bring about higher real gross domestic product, more employment, and more sustainable public finances. The benefits of joining the Euro Area are mainly due to increases in productivity.
ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few ye... more ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that the optimal design of fiscal policies is rather close to the austerity course as detailed in the Slovenian Stability Program, revealing the small scope of possible alternative fiscal stabilization policies available due to the relatively low effectiveness of the fiscal instruments with respect to their influence on the business cycle in the Slovenian economy.
The paper analyses the effects of different global developments and the resulting reactions of fi... more The paper analyses the effects of different global developments and the resulting reactions of fiscal policies after the "Great Recession" on the Slovenian economy. We use the macro model SLOPOL8.1, an econometric model of the Slovenian economy, to simulate the effects of different scenarios for the global economy under the assumption of "no-policy" reactions, i.e. assuming that macroeconomic policies are conducted without attempting to deal with the effects of the world economy. Moreover, we investigate how fiscal policy should react under each scenario if it aims at minimizing some intertemporal objective function containing important macroeconomic policy targets as arguments. It turns out that the development of the Slovenian economy depends strongly on world business cycles. If another crisis follows the "Great Recession", a highly expansionary design of fiscal policies is required in order to achieve reasonable rates of growth or levels of output, which is neither realistic nor sustainable. There are strong trade-offs between countercyclical fiscal policies and the requirements of fiscal solvency. Although acceptable fiscal policies have to be mildly countercyclical, they are not able to protect the Slovenian economy from the negative effects of another slump such as the one occurring during the "Great Recession".
In this article, we use the macroeconometric model SLOPOL10 to calculate simulations of the devel... more In this article, we use the macroeconometric model SLOPOL10 to calculate simulations of the development of the Slovenian economy until 2030. Starting from the present favourable prospects of the European economies, the forecast is very optimistic but it can nevertheless be improved by optimal fiscal policies as calculated using the OPTCON2 algorithm. If a negative shock to world trade of a size comparable to the Great Recession occurs, it will entail a decline in GDP and a slow recovery. In this case, optimal fiscal policies should not act in an expansionary way as the effectiveness of fiscal policy with respect to output and employment is rather limited in a small open economy like Slovenia. Instead, the goal of budget consolidation will call for a more restrictive fiscal policy, at least if the shock is temporary.
Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Af... more Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The "Papers" are intended to increase awareness of the technical work being done by the staff and to seek comments and suggestions for further analyses. Views expressed represent exclusively the positions of the author and do not necessarily correspond to those of the European Commission.
Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Af... more Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The "Papers" are intended to increase awareness of the technical work being done by the staff and to seek comments and suggestions for further analyses. Views expressed represent exclusively the positions of the author and do not necessarily correspond to those of the European Commission.
The sensitivity of results from optimum control problems with respect to uncertain parameters is ... more The sensitivity of results from optimum control problems with respect to uncertain parameters is investigated in a numerical case study for Austria. Optimal stabilization policies for the period 1995 to 2000 are calculated under varying assumptions about stochastic parameters within the framework of a problem of quantitative economic policy. An intertemporal objective function is minimized subject to the constraints of a small macroeconometric model, and approximately optimal values for federal budget expenditures and revenues are determined. It is shown that the deterministic and the fully stochastic optimal policies are rather similar. However, optimization results can be very different when covariances between different parameters are not taken into account, especially when parameters affecting the dynamic structure of the model are assumed to be stochastic.
I n this pape r we study a two-person non-cooperative differential game model of the trade-off be... more I n this pape r we study a two-person non-cooperative differential game model of the trade-off between unemployment and inflation with the government as player one and the central bank as the second player , Open-loop Nash and Stackelberg equilibrium solutions are derived analytically; it is shown that they do not coincide, Using numerical examples we study the sensitivity of the optimal open-loop solutions with respect to the parameters for both solution concepts , We show that in the examples used both players p r efer the Stackelberg to the Nash equilibrium solution ,
Gegenstand dieses Kapitels ist die Auseinandersetzung Karl Poppers mit der Staatsphilosophie Plat... more Gegenstand dieses Kapitels ist die Auseinandersetzung Karl Poppers mit der Staatsphilosophie Platons. Dazu wird zuerst die Ideenlehre Platons als Grundlage seiner politischen Philosophie kurz dargestellt und darauf aufbauend seine Staatsphilosophie nach der Politeia. Anschliesend werden die wichtigsten Argumente Poppers gegen diese Staatsphilosophie und seine Theorie der offenen Gesellschaft im Gegensatz zur geschlossenen Gesellschaft bei Platon erortert. Der Vorwurf Poppers, die Philosophie Platons rechtfertige den Totalitarismus, ist weitgehend berechtigt; fur den Zusammenhang mit dem Historizismus wird dagegen von Popper nur schwach argumentiert.
Optimal stabi]jzaLion policies for the period 1995 to 2000 are calculated in a numerical case stu... more Optimal stabi]jzaLion policies for the period 1995 to 2000 are calculated in a numerical case study for Austria under varying ass.umptions about stochastic parameters within the framework of a problen1 of quantitative economic policy. An interternporal objective function is Ininilnized subject to the constraints of a sInall luacroeconODletric model, and approxitnatcly optimal values for federal budget expenditures and revenues are determined. It is shown that the determi.nistic and the fully stochastic. optimal policies are rather sjmilar. However, optimization results can be very different \vhen covariances between different paranleters are not taken into account, especially when parameters affecting the dynuruic structure of the lllodel are assumed to be stochastic.
ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few ye... more ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that the optimal design of fiscal policies is rather close to the austerity course as detailed in the Slovenian Stability Program, revealing the small scope of possible alternative fiscal stabilization policies available due to the relatively low effectiveness of the fiscal instruments with respect to their influence on the business cycle in the Slovenian economy.
In this paper we present an application of dynamic tracking games to a monetary union. We use a s... more In this paper we present an application of dynamic tracking games to a monetary union. We use a small stylized nonlinear two-country macroeconomic model of a monetary union for analysing the interactions between two fiscal (governments) and one monetary (common central bank) policy makers. We introduce a negative asymmetric demand side shock describing the macroeconomic dynamics within a monetary union similar to the economic crisis (2007–2010) and the sovereign debt crisis (since 2010) in Europe. We investigate the welfare consequences of three scenarios: fiscal policies by independent governments (the present situation), centralized fiscal policy (a fiscal union) with an independent central bank, and a fully centralized fiscal and monetary union. For the latter two scenarios, we investigate the effects of different assumptions about the weights for the two governments in the cooperative agreement.
Proceedings of the 44th International Academic Conference, Vienna, 2018
In 2009, Serbia applied officially for EU membership, and on 21 January 2014, membership negotiat... more In 2009, Serbia applied officially for EU membership, and on 21 January 2014, membership negotiations started. If Serbia joins the EU, it will have to adopt the euro as legal tender as soon as it fulfils the relevant Maastricht criteria. By means of simulations with a macroeconometric model of the Serbian economy, this paper examines what macroeconomic effects can be expected from Serbia's EU membership and from its membership of the Euro Area. The macroeconometric model for Serbia comprises the key macroeconomic markets, i.e. the labor, goods, monetary and foreign exchange markets. It contains equations for GDP and its expenditure components (consumption of private households, government consumption, fixed capital formation, exports, and imports), the price level, wages, employment, unemployment, interest rates, and exchange rates. In addition, the government sector is modeled in some detail. It is shown that EU accession and the introduction of the euro bring about higher real GDP, more employment, and slightly higher inflation due to additional aggregate demand. Public finances are affected positively. The benefits of joining the Euro Area are mainly due to supply side effects, viz. increases in productivity.
In 2009, Serbia officially applied for European Union (EU) membership. In 2014, membership negoti... more In 2009, Serbia officially applied for European Union (EU) membership. In 2014, membership negotiations began. After joining the EU, Serbia will have to adopt the euro as legal tender as soon as it fulfils the relevant Maastricht criteria. So far, the quantitative consequences of such changes in the institutional framework on the macroeconomy and the major objective variables of Serbia (or another West Balkan country) have not been analyzed. In this paper, we examine likely macroeconomic effects from Serbia's membership in the EU and the Euro Area by means of simulations with a macroeconometric model of the Serbian economy. We show that EU accession and the introduction of the euro bring about higher real gross domestic product, more employment, and more sustainable public finances. The benefits of joining the Euro Area are mainly due to increases in productivity.
ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few ye... more ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that the optimal design of fiscal policies is rather close to the austerity course as detailed in the Slovenian Stability Program, revealing the small scope of possible alternative fiscal stabilization policies available due to the relatively low effectiveness of the fiscal instruments with respect to their influence on the business cycle in the Slovenian economy.
The paper analyses the effects of different global developments and the resulting reactions of fi... more The paper analyses the effects of different global developments and the resulting reactions of fiscal policies after the "Great Recession" on the Slovenian economy. We use the macro model SLOPOL8.1, an econometric model of the Slovenian economy, to simulate the effects of different scenarios for the global economy under the assumption of "no-policy" reactions, i.e. assuming that macroeconomic policies are conducted without attempting to deal with the effects of the world economy. Moreover, we investigate how fiscal policy should react under each scenario if it aims at minimizing some intertemporal objective function containing important macroeconomic policy targets as arguments. It turns out that the development of the Slovenian economy depends strongly on world business cycles. If another crisis follows the "Great Recession", a highly expansionary design of fiscal policies is required in order to achieve reasonable rates of growth or levels of output, which is neither realistic nor sustainable. There are strong trade-offs between countercyclical fiscal policies and the requirements of fiscal solvency. Although acceptable fiscal policies have to be mildly countercyclical, they are not able to protect the Slovenian economy from the negative effects of another slump such as the one occurring during the "Great Recession".
In this article, we use the macroeconometric model SLOPOL10 to calculate simulations of the devel... more In this article, we use the macroeconometric model SLOPOL10 to calculate simulations of the development of the Slovenian economy until 2030. Starting from the present favourable prospects of the European economies, the forecast is very optimistic but it can nevertheless be improved by optimal fiscal policies as calculated using the OPTCON2 algorithm. If a negative shock to world trade of a size comparable to the Great Recession occurs, it will entail a decline in GDP and a slow recovery. In this case, optimal fiscal policies should not act in an expansionary way as the effectiveness of fiscal policy with respect to output and employment is rather limited in a small open economy like Slovenia. Instead, the goal of budget consolidation will call for a more restrictive fiscal policy, at least if the shock is temporary.
Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Af... more Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The "Papers" are intended to increase awareness of the technical work being done by the staff and to seek comments and suggestions for further analyses. Views expressed represent exclusively the positions of the author and do not necessarily correspond to those of the European Commission.
Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Af... more Economic Papers are written by the Staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The "Papers" are intended to increase awareness of the technical work being done by the staff and to seek comments and suggestions for further analyses. Views expressed represent exclusively the positions of the author and do not necessarily correspond to those of the European Commission.
The sensitivity of results from optimum control problems with respect to uncertain parameters is ... more The sensitivity of results from optimum control problems with respect to uncertain parameters is investigated in a numerical case study for Austria. Optimal stabilization policies for the period 1995 to 2000 are calculated under varying assumptions about stochastic parameters within the framework of a problem of quantitative economic policy. An intertemporal objective function is minimized subject to the constraints of a small macroeconometric model, and approximately optimal values for federal budget expenditures and revenues are determined. It is shown that the deterministic and the fully stochastic optimal policies are rather similar. However, optimization results can be very different when covariances between different parameters are not taken into account, especially when parameters affecting the dynamic structure of the model are assumed to be stochastic.
I n this pape r we study a two-person non-cooperative differential game model of the trade-off be... more I n this pape r we study a two-person non-cooperative differential game model of the trade-off between unemployment and inflation with the government as player one and the central bank as the second player , Open-loop Nash and Stackelberg equilibrium solutions are derived analytically; it is shown that they do not coincide, Using numerical examples we study the sensitivity of the optimal open-loop solutions with respect to the parameters for both solution concepts , We show that in the examples used both players p r efer the Stackelberg to the Nash equilibrium solution ,
Gegenstand dieses Kapitels ist die Auseinandersetzung Karl Poppers mit der Staatsphilosophie Plat... more Gegenstand dieses Kapitels ist die Auseinandersetzung Karl Poppers mit der Staatsphilosophie Platons. Dazu wird zuerst die Ideenlehre Platons als Grundlage seiner politischen Philosophie kurz dargestellt und darauf aufbauend seine Staatsphilosophie nach der Politeia. Anschliesend werden die wichtigsten Argumente Poppers gegen diese Staatsphilosophie und seine Theorie der offenen Gesellschaft im Gegensatz zur geschlossenen Gesellschaft bei Platon erortert. Der Vorwurf Poppers, die Philosophie Platons rechtfertige den Totalitarismus, ist weitgehend berechtigt; fur den Zusammenhang mit dem Historizismus wird dagegen von Popper nur schwach argumentiert.
Optimal stabi]jzaLion policies for the period 1995 to 2000 are calculated in a numerical case stu... more Optimal stabi]jzaLion policies for the period 1995 to 2000 are calculated in a numerical case study for Austria under varying ass.umptions about stochastic parameters within the framework of a problen1 of quantitative economic policy. An interternporal objective function is Ininilnized subject to the constraints of a sInall luacroeconODletric model, and approxitnatcly optimal values for federal budget expenditures and revenues are determined. It is shown that the determi.nistic and the fully stochastic. optimal policies are rather sjmilar. However, optimization results can be very different \vhen covariances between different paranleters are not taken into account, especially when parameters affecting the dynuruic structure of the lllodel are assumed to be stochastic.
ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few ye... more ABSTRACT We investigate how fiscal policies should be designed in Slovenia during the next few years. Using the SLOPOL model, an econometric model of the Slovenian economy, we analyze the effects of different fiscal policies using simulations and determine optimal fiscal policies for Slovenia. We show that the optimal design of fiscal policies is rather close to the austerity course as detailed in the Slovenian Stability Program, revealing the small scope of possible alternative fiscal stabilization policies available due to the relatively low effectiveness of the fiscal instruments with respect to their influence on the business cycle in the Slovenian economy.
In this paper we present an application of dynamic tracking games to a monetary union. We use a s... more In this paper we present an application of dynamic tracking games to a monetary union. We use a small stylized nonlinear two-country macroeconomic model of a monetary union for analysing the interactions between two fiscal (governments) and one monetary (common central bank) policy makers. We introduce a negative asymmetric demand side shock describing the macroeconomic dynamics within a monetary union similar to the economic crisis (2007–2010) and the sovereign debt crisis (since 2010) in Europe. We investigate the welfare consequences of three scenarios: fiscal policies by independent governments (the present situation), centralized fiscal policy (a fiscal union) with an independent central bank, and a fully centralized fiscal and monetary union. For the latter two scenarios, we investigate the effects of different assumptions about the weights for the two governments in the cooperative agreement.
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