The Impact of the European Single Market on the Austrian Economy under Alternative Assumptions about Global and National Policy Reactions
In this paper, we explore the macroeconomic effects
of the European Single Market on Austria by simulating the
McKibbin-Sachs Global Model. Global interdependences and the
impact of long-run effects on short-run adjustments are taken into
account. We study the sensitivity of the results with respect to
different assumptions concerning monetary and fiscal policies for the
countries and regions of the world economy. The consequences of
different assumptions about budgetary policies in Austria are also
investigated. The simulation results are contrasted with ex-post
evaluations of the actual impact of Austria’s membership in the
Single Market. As a result, it can be concluded that the Austrian
participation in the European Single Market entails considerable
long-run gains for the Austrian economy with nearly no adverse sideeffects
on any macroeconomic target variable.
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