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Volume 61, Issue 4


Effects of Fiscal Consolidation in the Czech Republic

Klyuev, Vladimir; Snudden, Stephen

Year: 2011   Volume: 61   Issue: 4   Pages: 306-326

Abstract: This article uses the IMF’s Global Integrated Monetary and Fiscal Model (GIMF) to assess the impact of fiscal consolidation on the Czech economy. Its contribution is threefold. First, it provides estimates of dynamic fiscal multipliers for a variety of fiscal instruments (tax and expenditure), consolidation durations, assumptions about credibility, and monetary policy responses. Second, the article evaluates the impact on the economy of tightening measures envisaged in the 2011 budget. Third, the article considers alternative packages for consolidation beyond 2011 to achieve the government’s balanced budget target by 2016 and identifies which forms of adjustment are more “growth-friendly.”

JEL classification: E62, H60

Keywords: fiscal multipliers; fiscal consolidation; fiscal policy; general equilibrium models


RePEc: http://ideas.repec.org/a/fau/fauart/v61y2011i4p306-326.html

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