Policy mix for fiscal consolidation in Serbia: Conditional forecast approach

Labus, Miroljub; Labus, Milica

doi:10.5937/ekopre1502017l

Cited by 5 publications

(9 citation statements)

References 3 publications

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“…The model has been modified to the Serbian circumstances by Labus [7], and used for testing the fiscal consolidation package by Labus & Labus [8]. We will further modify the model in this paper in order to endogenize fiscal revenue categories.…”

Section: Modeling Fiscal Revenuementioning

confidence: 99%

“…Its individual impact is not explicitly presented in Figure 2 since it is lower than the benchmark size, which separates the six most influential state variables from all the others. 8 However, after a reduction in transfer payments and private consumption, the nominal exchange rate increases (the real exchange rate depreciates) with the consequence of inflating import prices and shifting away from imports towards domestic production. That has an expenditure-switching effect that supports GDP growth.…”

Section: Policy Simulationmentioning

confidence: 99%

“…Other key state variables generated a similar effect. Capacity utilization, foreign demand (foreign output over domestic output) and investment-to-capital 8 The criterion for separation was the absolute size of the weights. …”

Section: Policy Simulationmentioning

confidence: 99%

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From fiscal consolidation to fiscal optimization

Labus¹,

Labus²

2016

Ekonomika preduzeca

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SažetakProgram fiskalnog prilagođavanja uspešno je sproveden u 2015. Na osnovu postignutih rezultata sada je trenutak da se razmišlja o sledećoj fazi programa koja bi se odnosila na optimizaciju fiskalne politike. Pod pojmom "optimalne fiskalne politike" podrazumevamo takvo dizajniranje fiskalnih instrumenata koje bi omogućilo postizanje maksimalne stope rasta BDP. MMF je predložio okvire jedne takve politike u svojoj poslednjoj studiji o zemljama Centralne, Istočne i Jugoistočne Evrope.Mi ćemo u ovom radu testirati navedene preporuke, ali u izmenjenom analitičkom okviru koji nam daje QUEST_Serbia Dynamic Stochastic General Equilibrium (DSGE) model. Model je tako modifikovan da su sve fiskalne varijable tretirane kao endogene veličine podložne stohastičkim šokovima i oceni parametara na osnovu Bajesove procedure za period Y2003Q1 do Y2015Q4. Dodatno, primenili smo novi analitički alat dekompozicije impulsnih funkcija koji nam omogućava da kompleksne dinamičke nelinearne odnose svedemo na jednostavniju formu linearnih veza između stejt varijabli i ostalih endogenih varijabli.Naši rezultati podržavaju opšti stav MMF na primeru srpske ekonomije da smanjenje fiskalnog opterećenja na rad i kapital ima pozitivno dejstvo na rast, a da smanjenje fiskalnih transfera i državne potrošnje ima negativan, ali privremeni efekat na rast. Na drugoj strani, naši rezultati ne podržavaju podizanje stope PDV jer to negativno utiče na rast, a podržavaju povećanje javnih investicija samo pod određenim uslovima. Ključne reči: fiskalno prilagođavanje, DSGE modeli, optimalno oporezivanje, dekompozicija funkcije impulsnih odziva JEL CLASSIFICATION: C680, E620 AbstractThe fiscal consolidation program in 2015 was a success. Despite this success, it is time to consider a switch away from the fiscal consolidation policy towards a fiscal optimization policy. By "fiscal optimization policy" we mean a proper design of fiscal instruments that might lead towards the maximum potential rate of GDP growth. Relying on a panel regression model for 76 countries, the IMF recommended some guidelines for such an optimal fiscal policy in its latest regional report on Central, Eastern, and Southeastern European (CESEE) countries.In this paper we test the IMF's recommendations in a different analytical framework based on the QUEST_Serbia Dynamic Stochastic General Equilibrium (DSGE) model. We endogenize all fiscal revenue instruments, update macroeconomic data, and estimate the model's coefficients using Bayesian technique. We also develop a new analytical tool for the decomposition of Impulse Response Functions (IRF), which helps us to reduce complex dynamic non-linear general equilibrium relations to simpler linearized relations between endogenous variables and key state variables.Our findings support a general IMF suggestion in the particular case of the Serbian economy for reducing fiscal duties on labor and capital inputs, as well as public consumption and transfer payments. We, however, do not support increasing VAT rates or expanding public investments...

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Section: Modeling Fiscal Revenuementioning

confidence: 99%

Section: Policy Simulationmentioning

confidence: 99%

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From fiscal consolidation to fiscal optimization

Labus¹,

Labus²

2016

Ekonomika preduzeca

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“…when there is huge indebtedness. Lowering of high defi cit and public debt is the main task for the Serbian government (Labus & Labus, 2015). Yartey et al (2012) have presented several options for debt decrease including the following: growth, fi scal consolidation, infl ation, privatization, debt restructuring and defaults (Yartey et al, 2012).…”

Section: Macroeconomic Stability and Fiscal Policymentioning

confidence: 99%

Aspect of fiscal consolidation: Evidence from Serbia

Kalaš¹,

Andrašić²,

Pjanić³

2016

Eur J Appl Econ

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Abstract:In contemporary market conditions facing continuous debt crisis, the notion of fiscal consolidation is one of potential solutions for solving the main economic issues in any country. As regards fiscal consolidation, it necessary to point out to the importance of developing strategies aimed at minimizing deficit and debt level. Serbia is among those countries in which irrational spending is widely present with unfavourable tendency regarding the aspect of production and consumption. Over the past 25 years, Serbia has spent much more than it has produced, which has led to large budget deficits and debt level. The aim is to point out to the concept of fiscal consolidation and its implementation in Serbia, while the subject of this paper is to present the package of measures and strategies defined by the government of the Republic of Serbia and the Fiscal Council Program.

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“…At the micro level, fiscal policy can boost growth by altering work and investment incentives, improving labor market functioning, and enhancing total factor productivity [15]. We discussed potential micro effects of fiscal policy on growth at three earlier occasions within the Kopaonik Business Forum [17], [18], [19]. The Government, however, adopted an alternative policy to the one we recommended, which was not aimed at enhancing total factor productivity, but to improve tax collection and reducing some public spending.…”

Section: Introductionmentioning

confidence: 99%

GDP revisions and nowcasting in Serbia

Labus¹

2017

Ekonomika preduzeca

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SažetakMi se bavimo u ovom članku pitanjima vezanim za obračun kvartalnih računa, njihovu reviziju i instant procenu bruto domaćeg proizvoda (BDP) na bazi raspoloživih mesečnih ekonomskih i finansijskih indikatora. Ako se BDP pravovremeno i tačno meri, tada nosioci ekonomske politike i javnost mogu pouzdano da prate šta se dešava sa primenom programa fiskalne konsolidacije. Reputacija ovog programa, izmedju ostalog, zavisi od njegovih rezultata u koje javnost neće da sumnja. Kako su, medjutim, konačni podaci o BDP i njegovim komponentama poznati tek najesen iduće godine, a podložni su revizija ne samo do tada nego i u naredne dve godine -što je standardna metodologija ESA 2010 koju primenjuje Evrostat u Evropskoj uniji -pouzdanost ocena BDP može da trpi štetu zbog potrebe da ocene budu napravljene što hitnije. A što se tiče potrebe za brzim informacijama, brza procena BDP može da bude od koristi. Preliminarni podaci o BDP iz tekućeg kvartala raspoloživi su tek dva mesena po njegovom završetku. Brza procena BDP može da skrati taj period, čak i u odnosu na fleš ocenu BDP koja je raspoloživa mesec dana nakon završetka kvartala. Naravno, pravi izazovi kod brze procene BDP postoje kod pitanja koje mesečne serije uključiti u njenu analizu. Naš članak posvećen je svim ovim navedenim pitanjima. Ključne reči: obračun BDP-a, implicitni BDP deflator, brze procene BDP-a Abstract 1This paper addresses the issues of Quarterly National Accounts compilation and Gross Domestic Product (GDP) revisions as well as GDP shortterm forecasting based on available monthly series of economic and financial indicators. If GDP is promptly and properly measured, policy makers and the general public can closely monitor implementation of the fiscal consolidation program. Reputation of the program depends on achievements that should be beyond any doubt. Since figures on quarterly GDP and its components are provisional until autumn of next year, and subject for revision over the next two years -which is a standard ESA 2010 methodology -accuracy of data might interfere with prompt availability. Additionally, nowcasting can provide timely estimates of current GDP. Figures on this quarter GDP are available two months after the end of the quarter. Flash estimates of GDP are available one month after the end of the quarter. The nowcasting technique can substantially shorten this gap. However, the challenging issue is related to a choice of the monthly series that should be included in Mixed Data Sampling econometrics. We address both of these issues in this paper.

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Policy mix for fiscal consolidation in Serbia: Conditional forecast approach

Abstract: Fiscal consolidation as proposed is a workable policy, which will keep the rising debt-to-GDP ratio at sustainable level, but it is still not sufficient to reverse debt trend in 2017. Perhaps the other structural measures will do this job, but they are beyond the scope of this paper.

Cited by 5 publications

References 3 publications

From fiscal consolidation to fiscal optimization

From fiscal consolidation to fiscal optimization

Aspect of fiscal consolidation: Evidence from Serbia

GDP revisions and nowcasting in Serbia

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