<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper sets up a small open economy general equilibrium model operating in a monetary union. Exogenous oil shocks that hit the modelled economy are alleviated by introducing a pro-cyclical excise duty tax rule on oil prices. It provides a model-based theoretical background for studying a fiscal response of curbing the negative effects of volatile global oil prices on inflation. Against this backdrop, we estimate the key parameters of the DSGE model and simulate different responses of the fiscal policy tax rule, based on different values of the responsiveness of the excise duty parameter.</p></abstract>

This paper sets up a small open economy general equilibrium model operating in a monetary union. Exogenous oil shocks that hit the modelled economy are alleviated by introducing a pro-cyclical excise duty tax rule on oil prices. It provides a model-based theoretical background for studying a fiscal response of curbing the negative effects of volatile global oil prices on inflation. Against this backdrop, we estimate the key parameters of the DSGE model and simulate different responses of the fiscal policy tax rule, based on different values of the responsiveness of the excise duty parameter.

Oil Shocks and the Excise Duty Tax in a DSGE Model Setting

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Oil Shocks and the Excise Duty Tax in a DSGE Model Setting"}

This paper sets up a small open economy general equilibrium model operating in a monetary union. Exogenous oil shocks that hit the modelled economy are...

Oil Shocks and the Excise Duty Tax in a DSGE Model Setting

Published Online: Dec 05, 2018

Page range: 49 - 69

DOI: https://doi.org/10.2478/zireb-2018-0014

Keywords
Oil shocks, fiscal policy tax rule, DSGE model, inflation

© 2018 Črt Lenarčič, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Oil Shocks and the Excise Duty Tax in a DSGE Model Setting

Published Online: Dec 05, 2018

Page range: 49 - 69

DOI: https://doi.org/10.2478/zireb-2018-0014

KeywordsOil shocks, fiscal policy tax rule, DSGE model, inflation

© 2018 Črt Lenarčič, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Oil shocks, fiscal policy tax rule, DSGE model, inflation