Fiscal policy design in Greece in the aftermath of the crisis: an algorithmic approach

April 12, 2018 | Journal Article

front cover of JA201825 Authors: Ilias Kostarakos , Stelios Kotsios
Computational Economics , Vol. 51, Issue 4, April 2018, pp. 893–911

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.

  • Publication Details

    Journal Article

    ESRI Series Number: 201825
    Research Area: Macroeconomics
    Date of Publication: April 12, 2018
    Published Online: January 25, 2018
    Publisher: Springer
    View External Link

© 2015 The Economic and Social Research Institute. All rights reserved. Website by JET Design