Publication details

The effects of fiscal policy shocks in Czech and German economy: SVAR model with graphical modeling approach



Year of publication 2018
Type Article in Proceedings
Conference Proceedings of 36th International Conference Mathematical Methods in Economics
MU Faculty or unit

Faculty of Economics and Administration

Web Conference proceedings
Keywords Fiscal policy; Structural VAR model; Graphical Modelling
Description The paper will focus on identifying the influence of the Czech Republic (and Germany) fiscal policy on the business cycle of the Czech Republic (and Germany). The paper will state the fiscal policies of the states and their comparisons with the theory of real business cycle theory (RBC) and the New Keynesian theory (NK). A cascade of structural VAR models will be used to determine the impact of the fiscal policy shocks. The graphical modeling method will be used to determine the restrictions in the structural VAR models. The following variables will be used to estimate VAR models: government spending, government taxes, real output, consumption, working hours and real wages. The results obtained from the models will be used to assess the effectiveness of the fiscal policy (government spending shocks) and their impacts on the economic cycle. The results are in line with Keynesian theoretical models. Significant differences in impulse responses for individual economies can also be observed.
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