Tradeoffs of Austrian Budgetary Policies: An Optimum Control Analysis

Authors:	Neck Reinhard, University of Klagenfurt, Austria Stieber Harald, Austrian Federal Ministry of Finance, Austria
Topic:	9.1 Economic & Business Systems
Session:	Macroeconomic Control
Keywords:	optimal control, economics, optimization, policy, modeling

Abstract

In this paper, we use optimum control methods to determine optimal budgetary policies for Austria over a five-year horizon. Optimal fiscal policies are calculated using the algorithm OPTCON. They are compared to a simulation using extrapolated values of budgetary policy variables in terms of their performance with respect to Austrian macroeconomic targets. Policy tradeoffs between these variables are quantified.