Optimal Fiscal Policies for Austria

Using the optimum control algorithm OPTCON, we determine approximately optimal fiscal policies for Austria for the period 1995 to 2000 within the framework of a problem of quantitative economic policy. An intertemporal objective function is minimized subject to the constraints of the macroeconometric model FINPOL3, estimated for Austria using 3SLS. Exogenous variables of the model are forecast by time series methods. The results show that optimal fiscal policies can improve lipon the performance of the Austrian economy with respect to some policy objectives as compared to a simulation using extrapolations of policy variables.