Slowdown of the Polish Economy: Model-Based Simulations

Władysław Welfe and Waldemar Florczak

Gospodarka Narodowa-The Polish Journal of Economics, 2010, vol. 2010, issue 9

Abstract: The global financial crisis, and especially the recession that spread across Europe in 2009, also affected Poland. While the Polish economy continued to grow throughout 2009, its growth decelerated considerably in quarterly terms. The paper examines the determinants of the slowdown, based on a simulation macroeconomic model called W8D-2007. The model’s properties are briefly outlined, and then a baseline medium-term forecast is introduced and some simulation exercises are shown, dealing mainly with pessimistic scenarios. By means of simulations based on the W8D model, the paper tries to show the key factors behind the serious slowdown in the Polish economy in 2009. The model examines the impact of declining exports and FDI, on the one hand, and the growing investment risk and positive changes in household consumption, on the other. The possible impact of fiscal and monetary policies is also examined. The effects of a reduction of income tax rates and social contribution rates as well as the implications of an increased budget deficit are also shown, and finally the impact of declining interest rates on investment and consumer demand is evaluated. The likely effects of measures aimed at constraining the increase of unemployment rates are also analyzed. The results are compared with changing forecasts for the Polish economy presented during 2009.

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ags:polgne:356838

DOI: 10.22004/ag.econ.356838

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