The role of fiscal policies in maintaining macroeconomic stability. A DSGE model approach

George Pasmangiu
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George Pasmangiu: Bucharest University of Economic Studies

Theoretical and Applied Economics, 2018, vol. XXV, issue Special, 31-44

Abstract: In this paper I have analyzed the basic structure of The New-Keynesian DSGE models, which include a governmental component, a fiscal policy model with multiple implications in macroeconomic stability. In order to describe elaborated is the system of models, I will illustrate for this purpose a few previous publications within the specialized literature of this domain. The case study will focus on a basic DSGE model representing Romania's emerging economy. The data used are the structural parameters of this economy, and the actual structure of the model system contains basic macroeconomic variables, such as real GDP, private consumption, gross investments, public expenditure and public debts. The chosen methodology for settling the system is the Blanchard-Kahn technique. The result is a vector, containing the stable solution and the unstable solution of the model. The unique and stable solution represents the value of the fiscal policy shock variable.

Keywords: DSGE models; fiscal policy; Taylor's rule; macroeconomic stability; MATLAB. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:xxv:y:2018:i:special:p:31-44

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