Macroeconomic effects of structural reforms and fiscal consolidations: Trade-offs and complementarities

Papageorgiou, Dimitris; Vourvachaki, Evangelia

doi:10.1016/j.ejpoleco.2016.08.010

Cited by 28 publications

(22 citation statements)

References 39 publications

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“…H = N T = g are set equal to 4 so as the weighted average of hours worked to be equal to 0.4, 0.38 and 0.31 in the tradable, non-tradable and public sector respectively. The elasticities of substitution among the di¤erent intermediate good varieties in the tradable, " H ; and non-tradable sector, " N T , yield price markups equal to 1.1 and 1.4 respectively which are consistent with the fact that the tradable sector is more competitive than the non-tradable sector in Eurozone countries (see also Papageorgiou and Vourvachaki (2017) and Sajedi 2018). Finally the scale parameters, A H ; A N T ; A g are normalized to 1.…”

Section: Parameters Widely Used In Related Dsge Modelsmentioning

confidence: 54%

FIR-GEM: A SOE-DSGE Model for Fiscal Policy Analysis in Ireland

Varthalitis

2019

SSRN Journal

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This paper presents FIR-GEM: Fiscal IRish General Equilibrium Model. FIR-GEM is a small open economy DSGE model designed as …scal toolkit for …scal policy analysis in Ireland. To illustrate the model's potential for …scal policy analysis, we conduct three types of experiments. First, we analyse the …scal transmission mechanism through which Irish …scal policy a¤ects the Irish economy. Second, we compute …scal multipliers for the main tax-spending instruments, namely government consumption, public investment, public wage bill, public transfers, consumption, labour and capital tax. We focus on a …scal policy stimulus that is either implemented through spending increases or tax cuts. Third, we perform robustness analysis on key structural characteristics that can a¤ect quantitatively the size of …scal multipliers. We …nd that the size of …scal multipliers in the Irish economy heavily depends on its degree of openness, the method of …scal …nancing employed, the elasticity of the sovereign risk premia to Irish debt dynamics and the ‡exibility of Irish labour and product markets.

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Section: Parameters Widely Used In Related Dsge Modelsmentioning

confidence: 54%

FIR-GEM: A SOE-DSGE Model for Fiscal Policy Analysis in Ireland

Varthalitis

2019

SSRN Journal

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“…As already mentioned, there has been a rich literature on the Greek debt crisis. Papers close to ours, which have also used micro-founded macroeconomic models, include Arellano and Bai ( 2016 ), Gourinchas P-O et al ( 2017 ), Papageorgiou and Vourvachaki ( 2017 ), Economides et al ( 2017 ), Glomm et al ( 2018 ), Dellas et al ( 2017 ) and Chodorow-Reich et al ( 2019 ). A common finding of most of these papers, which is also a result shared by our work, is that roughly half of the loss in output between 2008 and 2016 is explained by the fiscal austeriry package adopted.…”

Section: Introductionmentioning

confidence: 62%

“…For DSGE models, see e.g. Arellano and Bai ( 2016 ), Gourinchas P-O et al ( 2017 ), Papageorgiou and Vourvachaki ( 2017 ), Economides et al ( 2017 ), Glomm et al ( 2018 ), Dellas et al ( 2017 ) and Chodorow-Reich et al ( 2019 ). See also the papers in the volumes edited by Meghir et al ( 2017 ) and Bournakis et al ( 2017 ).…”

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confidence: 99%

Austerity, Assistance and Institutions: Lessons from the Greek Sovereign Debt Crisis

2021

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This paper studies the Greek sovereign debt crisis in the aftermath of the 2007-8 global financial crisis looking for barriers to, and engines of, growth. The vehicle is a calibrated medium-scale micro-founded macroeconomic model. Departing from 2008, our simulations show that the adopted economic adjustment program (the fiscal austerity mix combined with the fiscal and monetary assistance provided by the EU, ECB and IMF), jointly with the observed deterioration in institutional quality (the degree of protection of property rights) can explain most (around 22 % of GDP) of the cumulative loss in GDP in the data (around 26 % of GDP) between 2008 and 2016. In particular, the economic adjustment program can explain a fall of around 12 % , while the deterioration in property rights accounts for another 10 % . Counterfactual simulations, on the other hand, show that this loss could have been around 9 % only, if the country had followed a different fiscal policy mix; if the degree of product marker liberalization was closer to that in the core euro zone countries; and, above all, if institutional quality in Greece had simply remained at its pre-crisis level. On the other hand, in the absence of the official fiscal bailouts, the depression would be much deeper, while, the accommodative role played by the quantitative policies of the ECB has been vital to the Greek economy. These results can be useful in the face of the ongoing covid-19 crisis. Supplementary Information The online version contains supplementary material available at (10.1007/s11079-020-09613-3)

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“…More regulation tends to hinder total factor productivity growth (Crafts 2006), although in the long run structural reforms lead to productivity gains (Papageorgiou and Vourvachaki 2016). The effects of (de)regulation on banking efficiency and productivity depend on the purpose of the reforms, while other factors, such as the economic conditions, monetary policy, and the timing and process of implementing the reforms, should also be taken into account.…”

Section: Introductionmentioning

confidence: 99%