Comprehensive Review of Quantitative Frameworks for Optimizing Fiscal Policy Response to global shocks

References

[1] D. Caldara and C. Kamps, “What are the effects of fiscal policy shocks? A VAR-based comparative analysis,” ECB working paper, 2008. [Online]. Available: https://www.econstor.eu/handle/10419/153311

[2] S. Basu and B. Bundick, “Uncertainty Shocks in a Model of Effective Demand,” Econometrica, vol. 85, no. 3, pp. 937–958, 2017, doi: 10.3982/ECTA13960.

[3] R. Beetsma, M. Giuliodori, and F. Klaassen, “Trade spill-overs of fiscal policy in the European Union: a panel analysis,” Econ. Policy, vol. 21, no. 48, pp. 640–687, 2006.

[4] A. B. Akonobi and C. O. Okpokwu, “Designing a Customer-Centric Performance Model for Digital Lending Systems in Emerging Markets,” vol. 3, no. 4, 2019.

[5] B. Essama-Nssah, “The poverty and distributional impact of macroeconomic shocks and policies: A review of modeling approaches,” 2005.

[6] C. Henry Olisakwe, L.Tuleun Tuleun, C Andrew. Eloka-Eboka, “Comparative study of Thevetia peruviana and Jatropha curcas seed oils as feedstock for Grease production‬.” [Online]. Available

[7] A. SHARMA, B. I. ADEKUNLE, J. C. OGEAWUCHI, A. A. ABAYOMI, and O. ONIFADE, “IoT-enabled Predictive Maintenance for Mechanical Systems: Innovations in Real-time Monitoring and Operational Excellence,” 2019,

[8] M. Goodfriend and R. G. King, “The New Neoclassical Synthesis and the Role of Monetary Policy,” NBER Macroecon. Annu., vol. 12, pp. 231–283, Jan. 1997, doi: 10.1086/654336.

[9] C. Betts and M. B. Devereux, “The international effects of monetary and fiscal policy in a two-country model,” Money Cap. Mobil. Trade Essays Honor Robert Mundell, pp. 9–52, 2001.

[10] L. Forni, L. Monteforte, and L. Sessa, “The general equilibrium effects of fiscal policy: Estimates for the euro area,” J. Public Econ., vol. 93, no. 3–4, pp. 559–585, 2009.

[11] B. S. Bernanke, M. Gertler, and S. Gilchrist, “The financial accelerator in a quantitative business cycle framework,” Handb. Macroecon., vol. 1, pp. 1341–1393, 1999.

[12] J. C. Eberly, J. H. Stock, and J. H. Wright, “The federal reserve’s current framework for monetary policy: A review and assessment,” 2019, [Online]. Available: https://www.nber.org/papers/w26002

[13] S. Hebous, “THE EFFECTS OF DISCRETIONARY FISCAL POLICY ON MACROECONOMIC AGGREGATES: A REAPPRAISAL: EFFECTS OF DISCRETIONARY FISCAL POLICY,” J. Econ. Surv., vol. 25, no. 4, pp. 674–707, Sept. 2011, doi: 10.1111/j.1467-6419.2010.00659.x.

[14] S. Gaber, I. Gruevski, and V. Gaber, “The effects of discretionary fiscal policy on macroeconomic aggregates,” BEH-Bus. Econ. Horiz., vol. 9, no. 1, pp. 33–40, 2013.

[15] T. Adenuga, A. T. Ayobami, and F. C. Okolo, “Laying the groundwork for predictive workforce planning through strategic data analytics and talent modeling,” IRE J., vol. 3, no. 3, pp. 159–161, 2019.

[16] G. Bårdsen, Ø. Eitrheim, E. Jansen, and R. Nymoen, The econometrics of macroeconomic modelling. OUP Oxford, 2005. [Online]. Available: https://books.google.com/books?

[17] M. J. Lee, M. D. Laxton, M. M. Kumhof, and C. Freedman, The case for global fiscal stimulus. International Monetary Fund, 2009.

[18] D. Caldara and C. Kamps, “The analytics of SVARs: a unified framework to measure fiscal multipliers,” Rev. Econ. Stud., vol. 84, no. 3, pp. 1015–1040, 2017.

[19] C. A. Sims, “Statistical Modeling of Monetary Policy and Its Effects,” Am. Econ. Rev., vol. 102, no. 4, pp. 1187–1205, June 2012, doi: 10.1257/aer.102.4.1187.

[20] J. B. Taylor and J. C. Williams, “Simple and robust rules for monetary policy,” in Handbook of monetary economics, vol. 3, Elsevier, 2010, pp. 829–859. [Online]. Available: https://www.sciencedirect.com/science/article/pii/B9780444534545000037

[21] C. J. Erceg, L. Guerrieri, and C. Gust, “SIGMA: a new open economy model for policy analysis,” 2006, [Online]. Available: https://www.federalreserve.gov/econres/ifdp/sigma-a-new-open-economy-model-for-policy-analysis.htm

[22] M. P. Giannoni, “Robust optimal monetary policy in a forward‐looking model with parameter and shock uncertainty,” J. Appl. Econom., vol. 22, no. 1, pp. 179–213, Jan. 2007, doi: 10.1002/jae.934.

[23] P. Krusell and A. A. Smith, “Quantitative macroeconomic models with heterogeneous agents,” Econom. Soc. Monogr., vol. 41, p. 298, 2006.

[24] N. Budina and S. Van Wijnbergen, “Quantitative approaches to fiscal sustainability analysis: a case study of Turkey since the crisis of 2001,” World Bank Econ. Rev., vol. 23, no. 1, pp. 119–140, 2009.

[25] V. V. Chari, L. J. Christiano, and P. J. Kehoe, “Policy analysis in business cycle models,” Front. Bus. Cycle Res., vol. 12, 1995, [Online]. Available: https://books.google.com/books

[26] William Nii Ayitey Menson, John Olajide Olawepo, Tamara Bruno, Semiu Olatunde Gbadamosi, Nannim Fazing Nalda, Victor Anyebe, Amaka Ogidi, Chima Onoka, John Okpanachi Oko, Echezona Edozie Ezeanolue, “Reliability of self-reported Mobile phone ownership in rural north-Central Nigeria: cross-sectional study‬.” [Online]. Available:

[27] K. Adam and R. M. Billi, “Optimal monetary policy under commitment with a zero bound on nominal interest rates,” J. Money Credit Bank., pp. 1877–1905, 2006.

[28] R. Reis, “Optimal monetary policy rules in an estimated sticky-information model,” Am. Econ. J. Macroecon., vol. 1, no. 2, pp. 1–28, 2009.

[29] C. Cantore, P. Levine, G. Melina, and J. Pearlman, “Optimal fiscal and monetary policy, debt crisis, and management,” Macroecon. Dyn., vol. 23, no. 3, pp. 1166–1204, 2019.

[30] S. Schmitt-Grohé and M. Uribe, “Optimal fiscal and monetary policy in a medium-scale macroeconomic model: Expanded version.” National Bureau of Economic Research Cambridge, Mass., USA, 2005. [Online]. Available: https://www.nber.org/papers/w11417

[31] S. Schmitt-Grohé and M. Uribe, “Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model,” NBER Macroecon. Annu., vol. 20, pp. 383–425, Jan. 2005, doi: 10.1086/ma.20.3585431.

[32] V. V. Chari and P. J. Kehoe, “Optimal fiscal and monetary policy,” Handb. Macroecon., vol. 1, pp. 1671–1745, 1999.

[33] A. Nakov, “Optimal and simple monetary policy rules with zero floor on the nominal interest rate,” Thirteen. Issue June 2008 Int. J. Cent. Bank., 2018, [Online]. Available: https://www.ijcb.org/journal/ijcb08q2a3.pdf

[34] J. A. Parker, “On measuring the effects of fiscal policy in recessions,” J. Econ. Lit., vol. 49, no. 3, pp. 703–718, 2011.

[35] O. Okenwa, O. K., Uzozie, O. T., & Onaghinor, “Supply Chain Risk Management Strategies for Mitigating Geopolitical and Economic Risks‬.” [Online]. Available: https://scholar.google.com/citations?

[36] A. Kormilitsina, “Oil price shocks and the optimality of monetary policy,” Rev. Econ. Dyn., vol. 14, no. 1, pp. 199–223, 2011.

[37] D. Laxton and P. Pesenti, “Monetary rules for small, open, emerging economies,” J. Monet. Econ., vol. 50, no. 5, pp. 1109–1146, 2003.

[38] S. Leduc and K. Sill, “Monetary policy, oil shocks, and TFP: accounting for the decline in US volatility,” Rev. Econ. Dyn., vol. 10, no. 4, pp. 595–614, 2007.

[39] J. Galí, Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press, 2015.

[40] P.-R. Agénor, Monetary policy under flexible exchange rates: an introduction to inflation targeting, vol. 124. World Bank Publications, 2000.

[41] E. Castelnuovo, “Monetary policy shocks and financial conditions: A Monte Carlo experiment,” J. Int. Money Finance, vol. 32, pp. 282–303, 2013.

[42] R. Kollmann, “Monetary policy rules in the open economy: effects on welfare and business cycles,” J. Monet. Econ., vol. 49, no. 5, pp. 989–1015, 2002.

[43] M. Bodenstein, L. Guerrieri, and L. Kilian, “Monetary Policy Responses to Oil Price Fluctuations,” IMF Econ. Rev., vol. 60, no. 4, pp. 470–504, Dec. 2012, doi: 10.1057/imfer.2012.19.

[44] P. Levine, “Monetary policy in an uncertain world: probability models and the design of robust monetary rules,” Indian Growth Dev. Rev., vol. 5, no. 1, pp. 70–88, 2012.

[45] M. T. Kiley and J. M. Roberts, “Monetary policy in a low interest rate world,” Brook. Pap. Econ. Act., vol. 2017, no. 1, pp. 317–396, 2017.

[46] B. McCallum and E. Nelson, “Monetary policy for an open economy: an alternative framework with optimizing agents and sticky prices,” Oxf. Rev. Econ. Policy, vol. 16, no. 4, pp. 74–91, 2000.

[47] J. Gali and T. Monacelli, “Monetary policy and exchange rate volatility in a small open economy,” Rev. Econ. Stud., vol. 72, no. 3, pp. 707–734, 2005.

[48] T. Kirsanova, C. Leith, and S. Wren-Lewis, “Monetary and fiscal policy interaction: the current consensus assignment in the light of recent developments,” Econ. J., vol. 119, no. 541, pp. F482–F496, 2009.

[49] D. S. Rickman, “MODERN MACROECONOMICS AND REGIONAL ECONOMIC MODELING,” J. Reg. Sci., vol. 50, no. 1, pp. 23–41, Feb. 2010, doi: 10.1111/j.1467-9787.2009.00647.x.

[50] S. J. Turnovsky, Methods of macroeconomic dynamics. Mit Press, 2000.

[51] A. J. Auerbach and Y. Gorodnichenko, “Measuring the output responses to fiscal policy,” Am. Econ. J. Econ. Policy, vol. 4, no. 2, pp. 1–27, 2012.

[52] K. Mertens and M. O. Ravn, “Measuring the impact of fiscal policy in the face of anticipation: a structural VAR approach,” Econ. J., vol. 120, no. 544, pp. 393–413, 2010.

[53] F. Fall and J.-M. Fournier, “Macroeconomic uncertainties, prudent debt targets and fiscal rules,” 2015.

[54] G. Fagiolo and A. Roventini, “Macroeconomic policy in DSGE and agent-based models redux: New developments and challenges ahead,” Available SSRN 2763735, 2016, [Online]. Available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2763735

[55] J. Galsí and M. Gertler, “Macroeconomic modeling for monetary policy evaluation,” J. Econ. Perspect., vol. 21, no. 4, pp. 25–45, 2007.

[56] M. Franta, “Macroeconomic effects of fiscal policy in the Czech Republic: Evidence based on various identification approaches in a VAR framework,” Czech Natl. Bank Work. Pap. Ser., vol. 13, p. 2012, 2012.

[57] U. Jermann and V. Quadrini, “Macroeconomic effects of financial shocks,” Am. Econ. Rev., vol. 102, no. 1, pp. 238–271, 2012.

[58] A. Dizioli and J. M. Schmittmann, A macro-model approach to monetary policy analysis and forecasting for Vietnam. International Monetary Fund, 2015.

[59] V. Wieland, T. Cwik, G. J. Müller, S. Schmidt, and M. Wolters, “A new comparative approach to macroeconomic modeling and policy analysis,” J. Econ. Behav. Organ., vol. 83, no. 3, pp. 523–541, 2012.

[60] A. Berg, P. D. Karam, and D. Laxton, “A practical model-based approach to monetary policy analysis-overview,” 2006, [Online]. Available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=901871

[61] S. Leduc and K. Sill, “A quantitative analysis of oil-price shocks, systematic monetary policy, and economic downturns,” J. Monet. Econ., vol. 51, no. 4, pp. 781–808, 2004.

[62] S. Adjemian, M. Darracq Pariès, and F. Smets, “A quantitative perspective on optimal monetary policy cooperation between the us and the euro area,” 2008, [Online]. Available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1105364

[63] L. Marattin, M. Marzo, and P. Zagaglia, “A welfare perspective on the fiscal–monetary policy mix: The role of alternative fiscal instruments,” J. Policy Model., vol. 33, no. 6, pp. 920–952, 2011.

[64] A. J. Auerbach, W. G. Gale, and B. H. Harris, “Activist fiscal policy,” J. Econ. Perspect., vol. 24, no. 4, pp. 141–164, 2010.

[65] J. J. Rotemberg and M. Woodford, “An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy,” NBER Macroecon. Annu., vol. 12, pp. 297–346, Jan. 1997, doi: 10.1086/654340.

[66] J. J. Rotemberg and M. Woodford, “An optimization-based econometric framework for the evaluation of monetary policy: Expanded version.” National Bureau of Economic Research Cambridge, Mass., USA, 1998. [Online]. Available: https://www.nber.org/papers/t0233

[67] A. Turrini, W. Roeger, and I. P. Székely, “Banking crises, output loss, and fiscal policy,” CESifo Econ. Stud., vol. 58, no. 1, pp. 181–219, 2012.

[68] F. Bianchi and L. Melosi, “Dormant Shocks and Fiscal Virtue,” NBER Macroecon. Annu., vol. 28, pp. 1–46, Mar. 2014, doi: 10.1086/674588.

[69] J. Adda and R. W. Cooper, Dynamic economics: quantitative methods and applications. MIT press, 2003.

[70] J. E. Plasmans, J. Engwerda, B. Van Aarle, G. Di Bartolomeo, and T. Michalak, Dynamic modeling of monetary and fiscal cooperation among nations, vol. 8. Springer Science & Business Media, 2006.

[71] G. Coenen et al., “Effects of fiscal stimulus in structural models,” Am. Econ. J. Macroecon., vol. 4, no. 1, pp. 22–68, 2012.

[72] Y. Mimir and E. Sunel, “External shocks, banks, and optimal monetary policy: A recipe for emerging market central banks,” 58th Issue June 2019 Int. J. Cent. Bank., 2019, [Online]. Available: https://www.ijcb.org/journal/ijcb19q2a7.htm

[73] N. Stähler and C. Thomas, “FiMod—A DSGE model for fiscal policy simulations,” Econ. Model., vol. 29, no. 2, pp. 239–261, 2012.

[74] A. Silvestrini and A. Zaghini, “Financial shocks and the real economy in a nonlinear world: From theory to estimation,” J. Policy Model., vol. 37, no. 6, pp. 915–929, 2015.

[75] M. Shahid, A. Qayyum, and W. Shahid Malik, “Fiscal and monetary policy interactions in Pakistan using a dynamic stochastic general equilibrium framework,” 2016, [Online]. Available: https://mpra.ub.uni-muenchen.de/id/eprint/85549

[76] V. A. Muscatelli, P. Tirelli, and C. Trecroci, “Fiscal and monetary policy interactions: Empirical evidence and optimal policy using a structural New-Keynesian model,” J. Macroecon., vol. 26, no. 2, pp. 257–280, 2004.

[77] “Fiscal Foresight and Information Flows,” Econometrica, vol. 81, no. 3, pp. 1115–1145, 2013, doi: 10.3982/ECTA8337.

[78] M. M. Croce, H. Kung, T. T. Nguyen, and L. Schmid, “Fiscal policies and asset prices,” Rev. Financ. Stud., vol. 25, no. 9, pp. 2635–2672, 2012.

[79] J. A. Frenkel and A. Razin, Fiscal policies and growth in the world economy. MIT press, 1996.

[80] F. Gomes, A. Michaelides, and V. Polkovnichenko, “Fiscal policy and asset prices with incomplete markets,” Rev. Financ. Stud., vol. 26, no. 2, pp. 531–566, 2013.

[81] G. Cuadra, J. M. Sanchez, and H. Sapriza, “Fiscal policy and default risk in emerging markets,” Rev. Econ. Dyn., vol. 13, no. 2, pp. 452–469, 2010.

[82] G. Halkos and E. Paizanos, “Fiscal policy and economic performance: A review of the theoretical and empirical literature,” 2015, [Online]. Available: https://mpra.ub.uni-muenchen.de/id/eprint/67737

[83] E. G. Mendoza and P. Oviedo, “Fiscal policy and macroeconomic uncertainty in developing countries: The tale of the tormented insurer.” National Bureau of Economic Research Cambridge, Mass., USA, 2006. [Online]. Available: https://www.nber.org/papers/w12586

[84] A. Spilimbergo, S. Symansky, O. J. Blanchard, and C. Cottarelli, “Fiscal policy for the crisis,” Available SSRN 1339442, 2009, [Online]. Available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1339442

[85] N. Gemmell, “Fiscal policy in a growth framework,” WIDER Discussion Paper, 2001. [Online]. Available: https://www.econstor.eu/handle/10419/53009

[86] E. Canton, “Fiscal policy in a stochastic model of endogenous growth,” Econ. Model., vol. 18, no. 1, pp. 19–47, 2001.

[87] A. Brunila, M. Buti, and J. I. ’T Veld, “Fiscal Policy in Europe: How Effective Are Automatic Stabilisers?,” Empirica, vol. 30, no. 1, pp. 1–24, Mar. 2003, doi: 10.1023/A:1022646912573.

[88] L. Coutinho, “Fiscal Policy in the New Open Economy Macroeconomics and Prospects for Fiscal Policy Coordination,” J. Econ. Surv., vol. 19, no. 5, pp. 789–822, Dec. 2005, doi: 10.1111/j.0950-0804.2005.00268.x.

[89] P. R. Mitchell, J. E. Sault, and K. F. Wallis, “Fiscal policy rules in macroeconomic models: principles and practice,” Econ. Model., vol. 17, no. 2, pp. 171–193, 2000.

[90] J.-T. Guo and K. J. Lansing, “Fiscal policy, increasing returns, and endogenous fluctuations,” Macroecon. Dyn., vol. 6, no. 5, pp. 633–664, 2002.

[91] F. Canova and E. Pappa, “Fiscal policy, pricing frictions and monetary accommodation,” Econ. Policy, vol. 26, no. 68, pp. 555–598, 2011.

[92] T. Monacelli and R. Perotti, “Fiscal policy, the trade balance and the real exchange rate: Implications for international risk sharing,” Manuscr. IGIER Univ. Bocconi, vol. 6, pp. 1–57, 2006.

[93] M.-G. Attinasi, M. Lalik, and I. Vetlov, Fiscal spillovers in the euro area a model-based analysis. European Central Bank, 2017. [Online]. Available: https://www.econstor.eu/bitstream/10419/162673/1/884727793.pdf

[94] T. Davig, E. M. Leeper, J. Galí, and C. Sims, “Fluctuating Macro Policies and the Fiscal Theory [with Comments and Discussion],” NBER Macroecon. Annu., vol. 21, pp. 247–315, Jan. 2006, doi: 10.1086/ma.21.25554956.

[95] J. Buongiorno, “Forest sector modeling: a synthesis of econometrics, mathematical programming, and system dynamics methods,” Int. J. Forecast., vol. 12, no. 3, pp. 329–343, 1996.

[96] F. Gallego, K. Schmidt-Hebbel, and L. Servén, “General Equilibrium Dynamics of Foreign Shocks and Policy Changes in Chile,” Gen. Equilib. Models Chil. Econ., pp. 113–62, 2005.

[97] W. J. McKibbin and J. D. Sachs, Global linkages: Macroeconomic interdependence and cooperation in the world economy. Brookings Institution Press, 2011.

[98] F. Van Tongeren, H. Van Meijl, and Y. Surry, “Global models applied to agricultural and trade policies: a review and assessment,” Agric. Econ., vol. 26, no. 2, pp. 149–172, Nov. 2001, doi: 10.1111/j.1574-0862.2001.tb00060.x.

[99] M. H. Pesaran and M. R. Wickens, Eds., “Handbook of Applied Econometrics. Volume I: Macroeconomics,” in Handbook of Applied Econometrics. Volume I: Macroeconomics, Oxford, UK: Blackwell Publishing Ltd, 1999, pp. 139–187. doi: 10.1111/b.9780631215585.1999.00008.x.

[100] K. Aoki, J. Proudman, and G. Vlieghe, “House prices, consumption, and monetary policy: a financial accelerator approach,” J. Financ. Intermediation, vol. 13, no. 4, pp. 414–435, 2004.

[101] J. H. Lopez, K. Schmidt-Hebbel, and L. Servén, “How effective is fiscal policy in raising national saving?,” Rev. Econ. Stat., vol. 82, no. 2, pp. 226–238, 2000.

[102] M. Goodfriend, “How the world achieved consensus on monetary policy,” J. Econ. Perspect., vol. 21, no. 4, pp. 47–68, 2007.

[103] J. J. Pérez and P. Hiebert, “Identifying endogenous fiscal policy rules for macroeconomic models,” J. Policy Model., vol. 26, no. 8–9, pp. 1073–1089, 2004.

[104] S. Kim, “International transmission of US monetary policy shocks: Evidence from VAR’s,” J. Monet. Econ., vol. 48, no. 2, pp. 339–372, 2001.

[105] G. D. Rudebusch, “Is the Fed too timid? Monetary policy in an uncertain world,” Rev. Econ. Stat., vol. 83, no. 2, pp. 203–217, 2001.

[106] D. Beau, L. Clerc, and B. Mojon, “Macro-prudential policy and the conduct of monetary policy,” 2012, [Online]. Available: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2132404

@article{1711040,
      author = {Melvin J. Oshomegie, Omodolapo Eunice Ogunsola, Blessing Olajumoke Farounbi},
      title = {Comprehensive Review of Quantitative Frameworks for Optimizing Fiscal Policy Response to global shocks},
      journal = {Iconic Research And Engineering Journals},
      year = {2019},
      volume = {2},
      number = {8},
      pages = {311-320},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1711040.pdf},
      abstract = {The increasing frequency and intensity of global economic shocks have underscored the importance of resilient fiscal policy frameworks. From financial crises to trade disruptions and pandemics, governments require adaptive tools to mitigate volatility and ensure macroeconomic stability. This paper presents a comprehensive review of quantitative frameworks for optimizing fiscal policy response to global shocks. It synthesizes theoretical foundations, empirical approaches, and policy applications while critically analyzing the effectiveness and limitations of different methodologies. By categorizing frameworks into econometric, simulation-based, and hybrid models, the study highlights their strengths and constraints in addressing issues of fiscal sustainability, countercyclical stabilization, and international spillovers. The methodology applies a structured literature review and comparative framework analysis, emphasizing the role of predictive modeling, scenario analysis, and dynamic policy simulation. Results demonstrate that hybrid models incorporating machine learning and traditional econometric structures offer superior adaptability under uncertainty. The discussion section explores policy trade-offs, model transparency, and political feasibility, arguing for multi-framework integration as a way forward. The paper concludes that future fiscal policy optimization requires a dynamic blend of quantitative rigor, computational innovation, and institutional adaptability.},
      keywords = {Fiscal Policy, Quantitative Frameworks, Global Shocks, Econometrics, Simulation Models, Optimization)},
      month = {February},
  }