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Using an estimated DSGE model for Hungary, the paper identifies the possible non-Keynesian channels through which a fiscal consolidation may manifest as expansionary. Simulations show that fiscal consolidation policies are typically contractionary. Nevertheless, taking into account some specific features of the Hungarian economy, there is a possibility that expansionary effects arise. These effects may take the form of a drop in interest rate risk premium or favourable balance sheet effects through the appreciation of the currency. However, the credibility of fiscal consolidation is key in achieving positive output effects. A non-credible consolidation is unlikely to expand output, regardless of the assumptions regarding the specific features of the economy, and regardless of the composition of a consolidation package.

Economics --- Hungary

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The GPM project is designed to improve the toolkit for studying both own-country and cross-country linkages. This paper creates a special version of GPM that includes the four largest Euro Area (EA) countries. The EA countries are more vulnerable to domestic and external demand shocks because adjustments in the real exchange rate between EA countries occur more gradually through inflation differentials. Spillovers from tight credit conditions in each EA country are limited by direct trade channels and small confidence spillovers, but we also consider scenarios where banks in all EU countries tighten credit conditions simultaneously.

Economic forecasting --- Economics --- Forecasting --- Economic indicators --- Econometric models. --- Banks and Banking --- Foreign Exchange --- Inflation --- Money and Monetary Policy --- Forecasting and Other Model Applications --- Open Economy Macroeconomics --- Economywide Country Studies: Europe --- Price Level --- Deflation --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Currency --- Foreign exchange --- Macroeconomics --- Finance --- Monetary economics --- Real exchange rates --- Real interest rates --- Bank credit --- Exchange rate adjustments --- Prices --- Financial services --- Money --- Interest rates --- Credit --- Germany

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Zonder onderwerpscode: financiewezen

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This paper employs a two-country New Keynesian DSGE model to assess the macroeconomic impact of the changes in monetary policy frameworks and the fiscal support in the U.S. and euro area during the pandemic. Moving from a previous target of “below, but close to 2 percent” to a formal symmetric inflation targeting regime in the euro area or from flexible to average inflation targeting in the U.S. is shown to boost output and inflation in both regions. Meanwhile, the fiscal packages approved in the U.S. and the euro area, and a slower withdrawal of fiscal support in the euro area, have a similar impact on output and inflation as changing the monetary policy frameworks . Simultaneously implementing these policies is mutually reinforcing, but insufficient to fully explain the unexpected increase in core inflation during 2021.

Macroeconomics --- Economics: General --- Inflation --- Money and Monetary Policy --- Public Finance --- Banks and Banking --- Price Level --- Deflation --- Monetary Policy --- Central Banks and Their Policies --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Interest Rates: Determination, Term Structure, and Effects --- Fiscal Policy --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Economic & financial crises & disasters --- Economics of specific sectors --- Monetary economics --- Public finance & taxation --- Banking --- Economic theory & philosophy --- Prices --- Fiscal stimulus --- Fiscal policy --- Interest rate floor --- Monetary policy --- Public investment spending --- Expenditure --- Central bank policy rate --- Financial services --- Currency crises --- Informal sector --- Economics --- Interest rates --- Public investments --- United States

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The populations of Central and Eastern European (CESEE) countries—with the exception of Turkey—are expected to decrease significantly over the next 30 years, driven by low or negative net birth rates and outward migration. These changes will have significant implications for growth, living standards and fiscal sustainability.

Demography --- Demography. --- Economic history. --- Population. --- Europe, Central --- Europe, Eastern --- Central Europe. --- Eastern Europe. --- Economic conditions. --- Human population --- Human populations --- Population growth --- Populations, Human --- Economics --- Human ecology --- Sociology --- Malthusianism --- History, Economic --- Historical demography --- Social sciences --- Population --- Vital statistics --- East Europe --- Eastern Europe --- Central Europe --- Aging --- Capacity --- Capital and Total Factor Productivity --- Cost --- Demographic Economics: General --- Economics of the Elderly --- Economics of the Handicapped --- Health economics --- Health --- Health: General --- Income economics --- Industrial productivity --- Labor Force and Employment, Size, and Structure --- Labor force --- Labor market --- Labor --- Labour --- Macroeconomics --- Non-labor Market Discrimination --- Population & demography --- Population aging --- Population and demographics --- Production and Operations Management --- Production --- Total factor productivity --- Turkey