Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90906
Authors: 
Plödt, Martin
Reicher, Claire
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper 1900
Abstract: 
We project the path of the public debt and primary surpluses for a number of countries in the euro area under a fiscal rule based on a set of estimated fiscal policy reaction functions. Our fiscal rule represents a fiscal analogue to a well-known monetary policy rule, and it is calibrated using country-specific as well as euro area-wide parameter estimates. We then forecast the dynamics of the fiscal aggregates under different convergence, growth, and interest rate scenarios and investigate the implications of these scenarios in projecting the future path of fiscal aggregates. We argue that our forecasting methodology may be used to deliver insights into the medium-run effects of different fiscal policy rules and to provide some early warning of future fiscal pressures.
Subjects: 
fiscal rules
fiscal policy
euro area
forecasting
JEL: 
H62
H63
H68
Document Type: 
Working Paper

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