Please download to get full document.

View again

of 5

A model for fiscal policy analysis in Norway Progress update

Norwegian Ministry of Finance A model for fiscal policy analysis in Norway Progress update Magnus Saxegaard November 28, 2018 Progress update Modelling: Completed a baseline model for fiscal policy analysis
0 views5 pages
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Documenttranscript
Norwegian Ministry of Finance A model for fiscal policy analysis in Norway Progress update Magnus Saxegaard November 28, 2018 Progress update Modelling: Completed a baseline model for fiscal policy analysis calibrated to Norwegian data Good progress towards incorporation of non-tradable sector Started process of estimating the model Ongoing projects relating to expectations formation, trends Outreach: Presentation of baseline model at Ministry of Finance, SSB, and Norges Bank Working paper documenting baseline model circulated to MMU and will be published on Ministry s external website 2 1 Characteristics of the baseline model Standard small open economy DSGE model Rule of thumb households Fiscal block: Taxes on personal income (ordinary income, social security, bracket tax), corporate (social security, profits), and indirect taxes (VAT, customs duties) Government consumption, investment, and transfers Public employment Exogenous oil fund withdrawals Labor force participation Unemployment Semi-structural foreign sector 3 A snapshot of the baseline model economy 4 2 What are we currently able to do with the model? Stochastic simulations to analyze a variety of domestic and international shocks Deterministic simulations to analyze permanent shifts in fiscal policy under a variety of financing assumptions Analyze a package of policy measures Effects of preannouncing policy measures Effects of monetary accommodation Analysis of fiscal multipliers 5 Calibration of baseline model Calibration of steady-state to match long-run moments in data Calibration of dynamic parameters to match simulations of monetary policy shock and productivity shock in NEMO Impulse responses broadly in line but NEMO has more persistence Comparison of permanent shifts in fiscal policy with KVARTS Qualitatively similar for most variables but KVARTS has significantly more persistence (being looked at in SSB) Significant difference in response of wages between models 6 3 Some thoughts on the way forward Introducing the Scandinavian model of inflation formation (hovedkursteorien) into the model likely to qualitatively change the results Current thinking: wages set by a union that seeks to preserve profitability of the tradable sector Changes to the household sector will focus on the transmission and propagation of shocks through household balance sheets Introduce housing and collateral constraints The estimation methodology will use outside information to overcome challenges in identifying the fiscal transmission mechanism System priors Possibilities include information on fiscal multipliers from KVARTS It would be useful if the model were able to characterize the trade-offs in using more/less oil money Important that the mechanisms are perceived as credible Current thinking in presentation by Ivan Frankovic to follow 7 Increasing focus must be put on a strategy for integrating the model in the work of the Ministry Experience from other countries illustrates importance of not underestimating this part of the project What can we learn from the other institutions (e.g. Norges Bank with NEMO, SSB with SNoW, the DREAM group in Denmark, and Konjunkturinstitutet in Sweden)? Potential elements of a strategy: Make sure that the model has a role in the Ministry s work processes Early engagement with a receiving team of model operators Embed model developers in operational units in Ministry of Finance User friendly front-end Training 8 4 Norwegian Ministry of Finance 5
Advertisement
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x