Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278478 
Year of Publication: 
2023
Series/Report no.: 
ECB Working Paper No. 2802
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Fiscal policy constitutes a key tool for business cycle stabilisation next to monetary policy. In this context, having a well-suited macroeconomic model for analysing fiscal policy at a central bank is of primary importance. This paper documents the fiscal block of the ECB-BASE, which is a semi-structural model for the euro area developed at the ECB for projections and policy analysis. The set-up of the fiscal block ensures comprehensive coverage of the government sector and tight links to the quarterly fiscal accounts. Thanks to this design, it is possible to simulate the model with a wide range of fiscal shocks, which, as shown in the paper, have distinct propagation mechanisms. Having discussed the set-up and the potency of fiscal policy in the model, this paper also includes the following applications for fiscal policy analysis: counterfactual scenarios with alternative fiscal rules, assessment of fiscal policy conducted in the euro area in the past and stochastic fiscal projections.
Subjects: 
Semi-structural model
euro area
simulations
forecasting
fiscal policy
JEL: 
C3
C5
E1
E2
E6
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-5998-8
Document Type: 
Working Paper

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