In this paper, we investigate the trade-off between the need for budget consolidation and the desirability of expansionary fiscal policies as a means of demand management by simulating alternative scenarios with a macroeconometric model of the Slovenian economy. The simulations show that for the...

The paper analyzes the effects of different reactions of fiscal (and to some extent monetary) policies to the Great Recession in Slovenia. We use the model SLOPOL8.1, an econometric model of the Slovenian economy, to simulate the effects of the global crisis under the assumption of no-policy...

We use a dynamic game model of a two-country monetary union to study the impacts of an exogenous fall in aggregate demand, the resulting increase in public debt, and the consequences of a sovereign debt haircut for a member country or bloc of the union. Two different scenarios for such a haircut...

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...

Policy makers constantly face optimal control problems: what controls allow to achieve certain targets in, e.g., GDP growth or inflation? Conventionally this is done by applying certain linear-quadratic optimization algorithms to dynamic econometric models. Several algorithms extend this...

The linear-quadratic (LQ) optimization is a close to standard technique in the optimal control framework. LQ is very well researched and there are many extensions for more sophisticated scenarios like nonlinear models. Usually, the quadratic objective function is taken as a prerequisite for...

In this paper, we analyze the reactions of European economies to a fiscal policy strategy aiming at diminishing the public sector. Within the framework of the MSG3 model, a macroeconomic model of the world economy, we perform several simulation experiments to explore the effects of reducing...