 Growth-Friendly Fiscal Strategies for the Czech EconomyCERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague Abstract: I build a structural scal DSGE model to address three important issues of Czech scal policy. First, I calculate scal multipliers for several revenue and expenditure categories of the government budget, the largest of which after the rst year are government consumption (0.6), government investment (0.5), and social security contributions paid by employers (0.4). Second, I use scal multipliers to derive the appropriate composition of growth-friendly scal strategies, e.g., the composition of temporary scal consolidation is more revenue-based, raising mainly consumption tax (a share of 30% in the composition) and wage tax (17%), accompanied by cuts in other social benets (35%) on the expenditure side. Third, I show that scal devaluation can boost real GDP growth by 0.4 percentage points in the rst year, when a budget-neutral tax shift of the magnitude of 1% of GDP occurs from direct taxes to consumption tax and capital tax. These results corroborates that the government can easily support the economy by appropriately adjusting scal instruments. Keywords: Bayesian estimation; DSGE; scal consolidation; scal devaluation; scal multipliers; scal policy; scal stimulus; scal strategy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp563 Access Statistics for this paper More papers in CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague Contact information at EDIRC. |
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