Impact of fiscal measures in response to the COVID-19 pandemic on small-open economies: lessons from Slovenia

Filippo Arigoni, Miha Breznikar, Črt Lenarčič and Matjaž Maletič

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate the impact of the fiscal expansion due to the COVID-19 outbreak on the Slovene economy using two models. First, we simulate fiscal shocks in 3-scenarios in a calibrated large-scale DSGE model. Second, we employ a small-scale VAR model to check the robustness of the theoretical results. The findings suggest a significant response of GDP, private consumption, and imports to fiscal shocks. In particular, the outcomes highlight that compared to other unanticipated fiscal developments a government consumption shock explains the lion's share of domestic fluctuations. The main transmission channel is high complementarity between private and government consumption.

Keywords: Fiscal shocks; Fiscal multipliers; DSGE model; VAR model. (search for similar items in EconPapers)
JEL-codes: C32 E32 E62 (search for similar items in EconPapers)
Date: 2020-12-02
New Economics Papers: this item is included in nep-dge, nep-eec, nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://mpra.ub.uni-muenchen.de/117335/1/Fiscal%20shocks_v8_mpra.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:104474

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