IDEAS home Printed from https://ideas.repec.org/a/srb/journl/y2012i1-2p33-40.html
   My bibliography  Save this article

Double-Dip Recession And Policy Options

Author

Listed:
  • Miroljub Labus

    (University of Belgrade, Faculty of Law)

Abstract

It is reasonable to expect the Serbian economy to decline up to -1% in 2012. A double-dip recession is inevitable. Lessons from the previous recession in 2009 suggest that an expansionary fiscal policy has clear limits, and that any misalignment of economic policies might be highly costly.This time, in addition to a recession and lack of policy coordination, the Serbian economy is exposed to the political risk associated with new elections. All of these risks deserve proper attention. In this paper, we provide a growth forecast for 2012 and discuss three potential policy response options. Coordination between fiscal consolidation and monetary expansion is the preferred solution. However, no one should take this for granted, and even if it is adopted by the Serbian policy makers, the problem of unsustainable long-term growth will remain. The model developed in this paper is a New-Keynesian model, modified to tackle the issue of fiscal consolidation. We expect that the inflation targeting policy framework will prevail in 2012, despite its poor record, and that this provides a good reason for using DSGE models to simulate policy options.

Suggested Citation

  • Miroljub Labus, 2012. "Double-Dip Recession And Policy Options," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 1-2, pages 33-40, January.
  • Handle: RePEc:srb:journl:y:2012:i:1-2:p:33-40
    as

    Download full text from publisher

    File URL: http://www.ses.org.rs/ekonomika-preduzeca/2012-1-2-03.pdf
    Download Restriction: no

    More about this item

    Keywords

    recession; inlation targeting; counter-cyclical policy; New-Keynesian DSGE models; growth forecast JEL classiication: E47; E58;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:srb:journl:y:2012:i:1-2:p:33-40. 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: (Milos Stamatovic) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/yueaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.