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Transmission of fiscal policy shocks into Romania's economy

Author

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  • Serbanoiu, Georgian Valentin
Abstract
In this paper I use a medium scale open economy DSGE model developed by Baksa, Benk and Jakab (2010) for the Hungarian economy. This model provides a notable degree of disaggregation both on the government revenue and expenditure side, being able to capture the shocks that come from fiscal policy decisions. My contributions can be summed up in the following three actions. First of all, I estimated the model for the Romanian economy, using Bayesian techniques. Secondly, I determined the parameters of fiscal feedback rules in order to establish if the automatic stabilizers work properly. And thirdly, I tried to analyze the impulse response functions in order to assess the effects of different fiscal policy measures on the most important macroeconomic variables.

Suggested Citation

  • Serbanoiu, Georgian Valentin, 2012. "Transmission of fiscal policy shocks into Romania's economy," MPRA Paper 40947, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40947
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    References listed on IDEAS

    as
    1. Giuliodori, Massimo & Beetsma, Roel, 2004. "What are the spill-overs from fiscal shocks in Europe? An empirical analysis," Working Paper Series 325, European Central Bank.
    2. Christina D. Romer & David H. Romer, 2009. "Do Tax Cuts Starve the Beast? The Effect of Tax Changes on Government Spending," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 139-214.
    3. Mirdala, Rajmund, 2009. "Effects of Fiscal Policy Shocks in the European Transition Economies," MPRA Paper 19481, University Library of Munich, Germany.
    4. Zoltan JAKAB & Daniel BAKSA & Szilárd BENK, 2010. "Does "The" Fiscal Multiplier Exist?," EcoMod2010 259600082, EcoMod.
    5. Adolfson, Malin & Laseen, Stefan & Linde, Jesper & Villani, Mattias, 2007. "Bayesian estimation of an open economy DSGE model with incomplete pass-through," Journal of International Economics, Elsevier, vol. 72(2), pages 481-511, July.
    6. Massimiliano Pisani & Andrea Gerali & Lorenzo Forni, 2008. "The macroeconomics of fiscal consolidations in a Monetary Union: the case of Italy," 2008 Meeting Papers 863, Society for Economic Dynamics.
    7. Stähler, Nikolai & Thomas, Carlos, 2012. "FiMod — A DSGE model for fiscal policy simulations," Economic Modelling, Elsevier, vol. 29(2), pages 239-261.
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    Cited by:

    1. Goran Petrevski & Borce Trenovski & Biljana Tashevska, 2019. "The effectiveness of fiscal and monetary policies in a small open economy – the case of Macedonia," Post-Communist Economies, Taylor & Francis Journals, vol. 31(6), pages 805-821, November.
    2. Dragan Tevdovski & Goran Petrevski & Jane Bogoev, 2019. "The effects of macroeconomic policies under fixed exchange rates: A Bayesian VAR analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2138-2160, January.

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    More about this item

    Keywords

    DSGE model; Bayesian estimation; Fiscal policy; Procyclicality of fiscal policy; Impulse response functions; Fiscal feedback rules; Fiscal deficit; Government debt;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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