Inflation and the role of macroeconomic policies: A model for the case of Denmark
This paper provides an assessment of the different channels through which monetary, fiscal and income policies affect prices and output in a small open economy and discuss which policy measures are effective and feasible in the face of inflationary shocks. We build a stock-flow-consistent model using sectoral data for Denmark. We then replicate the inflationary environment faced by Denmark and several other countries after the Covid-19 crisis. While taking monetary tightening as a forced policy response for a small open economy with fixed exchange rate, we explore a number of policies that, within the current institutional and legal framework, can potentially mitigate the effects of inflation. Our conclusion is that a close coordination of fiscal and income policies can help reduce the effects of adverse shocks to income without increasing inflation. Furthermore, we find that of all the policies implemented, monetary policy has the most dramatic effects on public debt sustainability.
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Subjects: | Macroeconomía, Política Económica, Inflación, |
Online Access: | https://nulan.mdp.edu.ar/id/eprint/4077/ https://nulan.mdp.edu.ar/id/eprint/4077/1/raza-etal-2023.pdf |
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dig-nulan-ar-40772024-05-02T14:07:19Z Inflation and the role of macroeconomic policies: A model for the case of Denmark Raza, Hamid Laurentjoye, Thibault Randrup Byrialsen, Mikael Valdecantos, Sebastián This paper provides an assessment of the different channels through which monetary, fiscal and income policies affect prices and output in a small open economy and discuss which policy measures are effective and feasible in the face of inflationary shocks. We build a stock-flow-consistent model using sectoral data for Denmark. We then replicate the inflationary environment faced by Denmark and several other countries after the Covid-19 crisis. While taking monetary tightening as a forced policy response for a small open economy with fixed exchange rate, we explore a number of policies that, within the current institutional and legal framework, can potentially mitigate the effects of inflation. Our conclusion is that a close coordination of fiscal and income policies can help reduce the effects of adverse shocks to income without increasing inflation. Furthermore, we find that of all the policies implemented, monetary policy has the most dramatic effects on public debt sustainability. Elsevier B.V. 2023-07-05 https://nulan.mdp.edu.ar/id/eprint/4077/ application/pdf eng https://nulan.mdp.edu.ar/id/eprint/4077/1/raza-etal-2023.pdf Structural Change and Economic Dynamics, 67, 32-43. ISSN 0954-349X. 10.1016/j.strueco.2023.06.006 <https://doi.org/10.1016/j.strueco.2023.06.006> Dinamarca info:eu-repo/semantics/altIdentifier/doi/10.1016/j.strueco.2023.06.006 info:eu-repo/semantics/dataset/url/https://nulan.mdp.edu.ar/id/eprint/4083/ info:eu-repo/semantics/article info:ar-repo/semantics/artículo info:eu-repo/semantics/publishedVersion Fil: Raza, Hamid. Aalborg University, MaMTEP. Aalborg University Business School; Denmark. Fil: Laurentjoye, Thibault. Aalborg University, MaMTEP. Aalborg University Business School; Denmark. Fil: Randrup Byrialsen, Mikael. Aalborg University, MaMTEP. Aalborg University Business School; Denmark. Fil: Valdecantos, Sebastián. Aalborg University, MaMTEP. Aalborg University Business School; Denmark. Macroeconomía Política Económica Inflación info:eu-repo/semantics/openAccess https://creativecommons.org/licenses/by/4.0/deed.es |
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Macroeconomía Política Económica Inflación Macroeconomía Política Económica Inflación |
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Macroeconomía Política Económica Inflación Macroeconomía Política Económica Inflación Raza, Hamid Laurentjoye, Thibault Randrup Byrialsen, Mikael Valdecantos, Sebastián Inflation and the role of macroeconomic policies: A model for the case of Denmark |
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This paper provides an assessment of the different channels through which monetary, fiscal and income policies affect prices and output in a small open economy and discuss which policy measures are effective and feasible in the face of inflationary shocks. We build a stock-flow-consistent model using sectoral data for Denmark. We then replicate the inflationary environment faced by Denmark and several other countries after the Covid-19 crisis. While taking monetary tightening as a forced policy response for a small open economy with fixed exchange rate, we explore a number of policies that, within the current institutional and legal framework, can potentially mitigate the effects of inflation. Our conclusion is that a close coordination of fiscal and income policies can help reduce the effects of adverse shocks to income without increasing inflation. Furthermore, we find that of all the policies implemented, monetary policy has the most dramatic effects on public debt sustainability. |
format |
info:eu-repo/semantics/article |
topic_facet |
Macroeconomía Política Económica Inflación |
author |
Raza, Hamid Laurentjoye, Thibault Randrup Byrialsen, Mikael Valdecantos, Sebastián |
author_facet |
Raza, Hamid Laurentjoye, Thibault Randrup Byrialsen, Mikael Valdecantos, Sebastián |
author_sort |
Raza, Hamid |
title |
Inflation and the role of macroeconomic policies: A model for the case of Denmark |
title_short |
Inflation and the role of macroeconomic policies: A model for the case of Denmark |
title_full |
Inflation and the role of macroeconomic policies: A model for the case of Denmark |
title_fullStr |
Inflation and the role of macroeconomic policies: A model for the case of Denmark |
title_full_unstemmed |
Inflation and the role of macroeconomic policies: A model for the case of Denmark |
title_sort |
inflation and the role of macroeconomic policies: a model for the case of denmark |
publisher |
Elsevier B.V. |
url |
https://nulan.mdp.edu.ar/id/eprint/4077/ https://nulan.mdp.edu.ar/id/eprint/4077/1/raza-etal-2023.pdf |
work_keys_str_mv |
AT razahamid inflationandtheroleofmacroeconomicpoliciesamodelforthecaseofdenmark AT laurentjoyethibault inflationandtheroleofmacroeconomicpoliciesamodelforthecaseofdenmark AT randrupbyrialsenmikael inflationandtheroleofmacroeconomicpoliciesamodelforthecaseofdenmark AT valdecantossebastian inflationandtheroleofmacroeconomicpoliciesamodelforthecaseofdenmark |
_version_ |
1798158690652520448 |