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Fiscal Policy Design in Greece in the Aftermath of the Crisis: An Algorithmic Approach

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  • Ilias Kostarakos

    (National and Kapodistrian University of Athens)

  • Stelios Kotsios

    (National and Kapodistrian University of Athens)

Abstract

We present a computational approach to the design of fiscal policy that is based on algorithmic, linear feedback control methods. In particular, in the context of a linear, deterministic macro-model, we develop an algorithmic procedure which allows us to design fiscal policy rules for government expenditures so that desired target-levels for GDP are exactly met (that is, complete tracking is achieved). In order to examine the effectiveness of our method we estimate the model for the Greek economy and run some counterfactual policy experiments. These experiments indicate that, for the Greek economy in the beginning of the crisis in early 2010, expansionary fiscal policy would have been able to stimulate growth and reduce the debt-to-GDP ratio.

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  • Ilias Kostarakos & Stelios Kotsios, 2018. "Fiscal Policy Design in Greece in the Aftermath of the Crisis: An Algorithmic Approach," Computational Economics, Springer;Society for Computational Economics, vol. 51(4), pages 893-911, April.
    • Handle: RePEc:kap:compec:v:51:y:2018:i:4:d:10.1007_s10614-017-9650-3
    DOI: 10.1007/s10614-017-9650-3
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    References listed on IDEAS

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    Cited by:

    1. Vasileios Spyrakis & Stelios Kotsios, 2021. "Public debt dynamics: the interaction with national income and fiscal policy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-22, December.
    2. Ioannis K. Dassios & Mel T. Devine, 2016. "A macroeconomic mathematical model for the national income of a union of countries with interaction and trade," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-15, December.
    3. Stelios Kotsios, 2023. "Feedback Control Techniques for a Discrete Dynamic Macroeconomic Model with Extra Taxation: An Algebraic Algorithmic Approach," Mathematics, MDPI, vol. 11(19), pages 1-12, October.
    4. Ilias Kostarakos & Stelios Kotsios, 2017. "Feedback policy rules for government spending: an algorithmic approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-10, December.

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