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COVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.

The eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.

The empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.

The present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.

The paper is devoted to modeling a pricing policy of competitive firms in a “closed” economy framework.

The proposed model can be regarded as an analog to CGE model and is based on the intersectoral balance methodology incorporating linear demand functions for goods and services.

By performing different model experiments, we show that a certain degree of competition can bring more profit to all competing firms, than in case of complete absence of such competition, what is also supported by empirical investigation. This finding implies that monopolies may perform worse than competitive firms, what contradicts with the modern provisions of economic theory, stating that monopoly is the most lucrative type of market structure for a producer. The discovered effect occurs due to the aggressive pricing policy, adopted by monopolies, spurring up the inflation spiral, which is most obvious if monopolies are strongly interdependent in terms of production matrix. This inflation spiral drives prices too high, what negatively reflects on firms’ costs and, consequently, results in monopolies receiving less profit.

The proposed model can also be useful for understanding and assessing various economic consequences after different external or internal shocks, what is especially crucial when conducting monetary or fiscal policy.

We examine the twin deficits and the direction of its movement for the case of Bolivia, a natural resource-dependent country, using the database of (Kehoe et al., 2019) from 1960 to 2019.

We combine a structural vector autoregression (SVAR) model with a dynamic stochastic general equilibrium (DSGE) model to understand the transmission mechanisms.

Our results suggest the existence of twin deficits in Bolivia; however, causality in the Mundell-Fleming sense does not hold. While fiscal policy shocks explain current account deficits, current account shocks have a stronger effect over fiscal deficit. In fact, only 23% of the variance of current account forecast errors is explained by fiscal policy shocks; in contrast, 45% of the variance of the fiscal deficit is explained by current account shocks.

The study is for a specific case, which is a limitation; however, other country samples can be included.

Based on the results of the work, policies can be recommended and designed to cushion the effects of external shocks.

According to the literature available for the Bolivian case, our work constitutes a significant contribution and, therefore, is original for this specific case.

This study aims to elucidate the dynamics of monetary and fiscal policy interactions in Brazil, focusing on the impacts of positive shocks in government consumption and interest rates. By comparing rational and behavioral agent responses, it clarifies how these frameworks influence gross domestic product (GDP), inflation, private and government consumption and nominal interest rates.

The study employs a new Keynesian dynamic stochastic general equilibrium (DSGE) model with Bayesian estimation from 2000Q1 to 2022Q4, capturing rational and behavioral behaviors with adjustments for Brazilian economic idiosyncrasies. Impulse response functions (IRF) assess the dynamic effects of policy shocks, providing a comparative analysis of the two frameworks.

Behavioral agents show greater initial sensitivity to policy shocks, causing more pronounced fluctuations in GDP, inflation and private consumption compared to rational agents. Over time, the behavioral approach leads to a more robust recovery, while the rational approach results in a quicker return to equilibrium but less pronounced long-term recovery. The study also finds fiscal policy can partially offset the negative impacts of monetary tightening, with a more delayed effect in the behavioral model.

This paper provides insights into the interplay between monetary and fiscal policies under different agent expectations, emphasizing the importance of incorporating behavioral elements into macroeconomic models to better capture policy dynamics in emerging markets.

The author augments an otherwise standard business cycle model with a richer government sector and adds money-in-utility (MIU) considerations to study economic fluctuations.

More specifically, real money balances enter in a non-separable way with consumption and leisure. This specification is then calibrated to Bulgarian data after the introduction of the currency board (1999–2020) gives a role to money in accentuating economic fluctuations.

This novel mechanism allows the framework to reproduce – better than the real business cycle (RBC) model – the observed variability and correlations among model variables, and those characterizing the labor market in particular. In addition, money is non-neutral and affects aggregate economic activity.

This is the first micro-founded monetary-DSGE (dynamic stochastic general equilibrium) model on Bulgaria trying to explain the role of money for economic fluctuations.

This paper explores the effects of fiscal policy in an economy with reciprocity in labor relations and fair wages, consumption taxes and a common income tax rate in place.

To this end, a dynamic general-equilibrium model with government sector is calibrated to Bulgarian data (1999–2018). Two regimes are compared and contrasted – the exogenous (observed) vs optimal policy (Ramsey) case. The focus of the paper is on the relative importance of consumption vs income taxation, as well as on the provision of utility-enhancing public services. Bulgarian economy was chosen as a case study due to its major dependence on consumption taxation as a source of tax revenue.

(1) The optimal steady-state income tax rate is zero; (2) the benevolent Ramsey planner provides the optimal amount of the utility-enhancing public services, which are now three times lower; (3) the optimal steady-state consumption tax needed to finance the optimal level of government spending is 18:7%.

This is the first study on optimal fiscal policy with reciprocity in labor relations.

Even with the Saudi Arabian Government's discretionary measures to mitigate the spread of the coronavirus disease 2019 (COVID-19), the economic sectors were not spared from the damage. Thus, the paper aims to use a computable general equilibrium (CGE) model to evaluate the impact of COVID-19 on the Kingdom of Saudi Arabia's (KSA) economy, with a special focus on small and medium enterprises (SMEs) and production. These influence the level of poverty.

The paper adopted the social accounting matrix (SAM) for Saudi Arabia built in 2021 by Imtithal Althumairi from Saudi Arabia's 2017 SAM. The model represents a snapshot of the economy and different flows that exist within the tasks and institutions. Two simulations (mild and severe) were conducted because of the focus on the distributional outcomes.

Decrease in job creation and economic growth were significant evidence from the study's findings. Findings show that more families hit below the poverty line because the negative impacts of the pandemic have shifted the income allocation curve. Findings show that the weakest of the poor are mitigated by government social grants during the pandemic.

The paper is restricted to the relevant literature relating to the impact of COVID-19 on Saudi Arabia's economy and evaluated using the SAM model. Moreover, the COVID-19 is still an ongoing scenario; thus, the model should be updated as data utilised for the operationalisation are made available.

The information from the suggested model can be suitable to measure the degree of the harm, and thus, the likely extent of the desirable policy feedback. Also, the model can be updated, as data are made available and formulated policies based on the updated data implemented by the policymakers.

Apart from the recovery planning of SMEs during the pandemic, the paper intends to stir up Saudi Arabia's policymakers through the macro-micro model to recovery planning and resilience of the economy with emphasis on mitigating unemployment.

This study aims to analyse the potential impacts of free trade agreement (FTA) between Indonesia and Organisation of Islamic Cooperation (OIC) countries by eliminating import tariffs in the halal food sector on welfare, gross domestic product (GDP) and trade balance. OIC countries as the second-largest organisation after the United Nations are the potential markets for the halal food industry.

This study used the Global Trade Analysis Project database version 10 by adopting a computable general equilibrium (CGE) model for two scenarios. The first scenario stated that Indonesia should conduct an FTA with ten potential OIC countries as export destination, while the second one stated that it should be conducted with all OIC countries.

Indonesia is predicted to get the highest increase in welfare by making an FTA with all OIC countries. Scenario 2 showed that Indonesia had much higher changes in real GDP with a positive change of 0.0018%. Even though it is projected to experience a surplus in the trade balance in both scenarios, Indonesia is predicted to experience a decline in exports for the particular halal food sector. The findings contribute some new insights to the existing literature, revealing an alignment between economic integration and the concept of international trade in Islam.

The limitation of this study is the available data that cannot describe the population of all OIC countries. Only 31 countries out of a total of 56 OIC countries can be used in research. The scope of research is limited to analysing FTAs between Indonesia and OIC countries in the form of abolishing import tariffs and does not include non-tariff barrier issues such as halal certification.

The preferential trade agreement is considered relevant as Indonesia’s initial commitment to conduct a bilateral trade with ten selected OIC countries. The Indonesia Government, however, still needs to make several mitigation efforts in various sectors experiencing losses as a result of economic integration, such as by creating a more conducive business climate, supporting the sources of capital, facilitating bureaucratic affairs, as well as providing tax incentives.

This paper contributes to the literature by focusing on the critical aspects of the FTA’s impacts on halal food sectors by optimizing the reduction of import tariffs of OIC countries. Different from previous studies, this study applied a static CGE model to examine the impacts of FTA on macroeconomic indicators.

This study examines the differences in the economic stimulus effects, transmission mechanisms, and output multipliers of government consumption, government traditional investment, and government science and technology investment.

This study constructs and estimates a New Keynesian model of endogenous technological progress embedded in the research and development (R&D) and technology transfer sectors. Using Chinese macroeconomic time series data from 1996 to 2019, this study calibrates and estimates the model and analyzes the impulse response function and a counterfactual simulation of expenditure structure adjustment.

The results show that compared with the traditional dynamic stochastic general equilibrium (DSGE) model, the endogenous process of technological progress amplifies the impact of government consumption shock and traditional government investment shock on the macroeconomy, leading to greater economic cycle fluctuations. As government investment in science and technology has positive external spillover effects on firm R&D activities and the application of innovation achievements, it can promote more sustainable economic growth than government consumption and traditional investment in the long run.

This study constructs an extended New Keynesian model with different types of government spending, which includes endogenous technological progress within the R&D and technology transfer sectors, thereby linking fiscal policy, business cycle fluctuations and long-term economic growth. This model can study the macroeconomic impact of fiscal expenditure structure adjustment when fiscal expansion is limited. In the Bayesian estimation of model parameters, this study not only uses macroeconomic variables but also adds a sequence of private R&D investment.

The purpose of this study is to investigate the interplay between fiscal dominance and monetary policy in South Africa from 1960 to 2023.

The study employs a structural vector autoregression (SVAR) medel to analyze the relationship between fiscal dominance and monetary policy. Short-term and long-term shocks of government borrowing and deficits are examined to understand their impact on inflation dynamics.

Fiscal dominance has a significant effect both in the short and long run. There is evidence that government debt and deficits increase inflation, overriding the effects of monetary policy aimed at maintaining price stability. On the other hand, the study reveals that money supply shocks have a greater effect in reducing fiscal dominance compared to interest rate shocks. The variance movement on inflation is significantly explained by government debt and deficits. This emphasizes the persistence of inflationary pressures associated with fiscal dominance, highlighting the importance of effective policy interventions to mitigate inflationary risks.

This study contributes to the existing literature by providing insights into the dynamics of fiscal dominance in South Africa. Moreover, this study extends the theoretical framework of the fiscal theory of the price level (FTPL) and the government budget constraint. This study contributes valuable insights into the dynamics of fiscal dominance in South Africa and offers guidance for policymakers in formulating strategies to safeguard economic stability.