Transmission of fiscal policy shocks into Romania's economy

Serbanoiu, Georgian Valentin (2012): Transmission of fiscal policy shocks into Romania's economy.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: DSGE model; Bayesian estimation; Fiscal policy; Procyclicality of fiscal policy; Impulse response functions; Fiscal feedback rules; Fiscal deficit; Government debt
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C11 - Bayesian Analysis: General

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