Fiscal tightening after the crisis. A scenario analysis for Poland
Poland has experienced a great deal of worsening of its fiscal situation following the economic slowdown of 2008–2009 caused by the worldwide financial crisis. General government deficit reached around 8% of GDP in 2010 both as a result of lower economic activity but also due to structural loosening that took part in the period immediately preceding the crisis. We attempt to assess which of the two contrasting fiscal consolidation strategies: expenditure-versus revenue-focused may be considered as preferable from the point of view of economic activity. The assessment is carried out using a recursive dynamic computable general equilibrium model. Our results show that, while the tightening has a negative effect on consumption, in the short run, the reaction of private consumption, employment and GDP in the medium run will greatly depend on the flexibility of the labour market and the behavior of private investment. We conclude that the expenditure-focused tightening scheme is consistently superior under all closures to the revenue--oriented scenario.
Volume (Year): 42 (2011)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: 00-919 Warszawa ul. Świętokrzyska 11/21|
Phone: (0-22) 653 10 00
Fax: (0-22) 620 85 18
Web page: http://www.bankikredyt.nbp.pl/menu_en.aspx
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- António Afonso, 2006.
"Expansionary fiscal consolidations in Europe: new evidence,"
Working Papers Department of Economics
2006/18, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- António Afonso, 2010. "Expansionary fiscal consolidations in Europe: new evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 17(2), pages 105-109, January.
- Afonso, António, 2006. "Expansionary fiscal consolidations in Europe: new evidence," Working Paper Series 0675, European Central Bank.
- Adi Brender & Allan Drazen, 2008. "How Do Budget Deficits and Economic Growth Affect Reelection Prospects? Evidence from a Large Panel of Countries," American Economic Review, American Economic Association, vol. 98(5), pages 2203-20, December.
- Alberto Alesina & Silvia Ardagna, 2010.
"Large Changes in Fiscal Policy: Taxes versus Spending,"
in: Tax Policy and the Economy, Volume 24, pages 35-68
National Bureau of Economic Research, Inc.
- Alberto F. Alesina & Silvia Ardagna, 2009. "Large Changes in Fiscal Policy: Taxes Versus Spending," NBER Working Papers 15438, National Bureau of Economic Research, Inc.
- Douglas Laxton & Susanna Mursula & Kevin Clinton & Michael Kumhof, 2010. "Budget Consolidation: Short-Term Pain and Long-Term Gain," IMF Working Papers 10/163, International Monetary Fund.
- Luisa Lambertini & Jose Tavares, 2003.
"Exchange Rates and Fiscal Adjustments: Evidence from the OECD and Implications for EMU,"
Boston College Working Papers in Economics
576, Boston College Department of Economics.
- Lambertini, Luisa & Tavares, Jose, 2002. "Exchange Rates and Fiscal Adjustments: Evidence from the OECD and Implications for EMU," FEUNL Working Paper Series wp412, Universidade Nova de Lisboa, Faculdade de Economia.
- Vladimir Klyuev & Stephen Snudden, 2011.
"Effects of Fiscal Consolidation in the Czech Republic,"
Czech Journal of Economics and Finance (Finance a uver),
Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 306-326, August.
- Stephen Snudden & Vladimir Klyuev, 2011. "Effects of Fiscal Consolidation in the Czech Republic," IMF Working Papers 11/65, International Monetary Fund.
- Werner Roeger & Jan Veld & Lukas Vogel, 2010. "Fiscal consolidation in Germany," Intereconomics: Review of European Economic Policy, Springer, vol. 45(6), pages 364-371, November.
- Alessandro Turrini, 2004. "Public investment and the EU fiscal framework," European Economy - Economic Papers 202, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
When requesting a correction, please mention this item's handle: RePEc:nbp:nbpbik:v:42:y:2011:i:3:p:33-66. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sylwia Roszkowska)
If references are entirely missing, you can add them using this form.