GAUK - 641012 Fiscal policy and rule-of-thumb consumers in the Czech Republic
|Principal investigator:||PhDr. Tomáš Adam|
PhDr. Jaromír Baxa Ph.D.
|Description:||The project will analyze the macroeconomic effects of fiscal policy shocks on the Czech economy using empirical VAR and theoretical DSGE models. The first part will estimate fiscal multipliers in the CR using VAR models, which will be identified based on ordering and structural identification and using Bayesian VAR models. This will yield robust results, which will be used for recommendations pertaining to output stabilization and budget consolidation.
The second part will estimate the share of rule-of-thumb households (those who consume their whole current income). This share will be used for theoretical analysis but it is interesting per se, since it indicates the level of financial development. Thus the estimation will be performed across OECD countries both under the assumption of its stability and using a time varying model, which will allow us to observe the differing financial development of transition countries and the effects of economic slowdown on households’ behaviour.
The third part will analyze the impacts of fiscal policy shocks using a theoretical DSGE model of a small open economy, which will include rule-of-thumb households, apart from the standard building blocks, which will remove the unrealistic assumption of consumption smoothing, which is common among the mainstream models.
|Work in grant:|
|Finance:||Accepted for financing in April 2012|