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Simulation Analysis of Public Debt and Fiscal Deficit in Austria – Optimal Economic Policies for the Past and the Future

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Abstract

The macroeconometric simulation model AMOD1 and the optimization algorithm OPTCON are used to evaluate fiscal policies for Austria since the late seventies. In particular, the question of optimal (debt stabilizing) fiscal policies for the past and for the future is analyzed within the framework of a medium-scaled simulation model. The first set of optimization experiments aims to assess optimal fiscal policies for debt stabilization for the historical period 1978–2000 while trying to maintain reasonable growth rates of approximately 2 percent of real GDP. Optimal values of the instruments and the targets are compared to empirical data for Austria. A second set of simulations calculates optimal paths for the fiscal instruments for the period 2001-2010, particularly with respect to the criteria of the Stability and Growth Pact, which is mandatory for member states of the Euro zone.

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Authors and Affiliations

  1. Department of Economics, University of Klagenfurt, Universitätsstraβe 65–67, A-9020, Klagenfurt, Austria

    Gottfried Haber

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  1. Gottfried Haber
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Haber, G. Simulation Analysis of Public Debt and Fiscal Deficit in Austria – Optimal Economic Policies for the Past and the Future. Empirica 28, 69–95 (2001). https://doi.org/10.1023/A:1010991922192

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