Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83532
Authors: 
Horváth, Ágnes
Jakab, Zoltán M.
Kiss, Gábor P.
Párkányi, Balázs
Year of Publication: 
2006
Series/Report no.: 
MNB Occasional Papers 52
Abstract: 
In this paper we investigate the possible effects of fiscal tightening in Hungary from two perspectives. First, simulations in an estimated neo-Keynesian model are used to characterise the effects of different scenarios for fiscal consolidations. We show that the composition of fiscal shocks is important for both the economic outcome and monetary policy. These simulations suggest a modest output cost of fiscal consolidation. Then we take a closer look at the non-Keynesian effects and their relevance for Hungary in a qualitative way. In our review of non-Keynesian channels of fiscal adjustments we conclude that expansionary effects are likely to become evident only in the medium or long run, rather than immediately after measures are taken.
Subjects: 
Keynesian
non-Keynesian effects
expansionary fiscal adjustment
Monetary policy reactions
Model simulations
JEL: 
E17
E52
E61
E62
E63
E65
H30
Document Type: 
Working Paper

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