Cover IMF Working Papers
The Ararat Fiscal Strategy Model: A Structural Framework for Fiscal Policy Analysis in Armenia
Author:
Victoria Babajanyan
Search for other papers by Victoria Babajanyan in
Current site
Google Scholar
PubMedClose
,
Daniel Baksanull

Search for other papers by Daniel Baksa in
Current site
Google Scholar
PubMedClose
,
Mr. Martin Fukac
Search for other papers by Mr. Martin Fukac in
Current site
Google Scholar
PubMedClose
,
Eduard Hakobyan
Search for other papers by Eduard Hakobyan in
Current site
Google Scholar
PubMedClose
,
Arshaluys Harutyunyan
Search for other papers by Arshaluys Harutyunyan in
Current site
Google Scholar
PubMedClose
,
Narek Karapetyan
Search for other papers by Narek Karapetyan in
Current site
Google Scholar
PubMedClose
,
Babken Pashinyan
Search for other papers by Babken Pashinyan in
Current site
Google Scholar
PubMedClose
,
Garik Petrosyannull

Search for other papers by Garik Petrosyan in
Current site
Google Scholar
PubMedClose
, and
Luis-Felipe Zanna
Search for other papers by Luis-Felipe Zanna in
Current site
Google Scholar
PubMedClose
Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 118
Language:
English
Publication Date:
10 Jun 2022
DOI:
https://doi.org/10.5089/9798400210754.001
ISBN:
9798400210754
ISSN:
1018-5941
Pages:
64
Keywords:
Structural model; DSGE model; fiscal rules; scenario analysis; financial programming; Armenia; Covid-19; AFSM simulation; shock decomposition; fiscal policy multiplier; AFSM application; overview of the Ararat Fiscal Strategy Model; Consumption; Public investment spending; Current spending; Global
Download PDF (2.2 MB) Download Epub
This paper presents an overview of the Ararat Fiscal Strategy Model (AFSM), which is a structural, New-Keynesian, DSGE, small open economy model with a rich fiscal block that includes several expenditure and revenue instruments, and types of debt. The AFSM is now a formal part of the Ministry of Finance analytical toolkit to do macroeconomic fiscal policy scenario analysis, which feeds into policy discussions, budget planning, and the Medium-Term Expenditure Framework. The model was applied to assses the macroeconomic impact of the “first wave” of the Covid-19 pandemic on the Armenian economy, including the mitigating effects of policy responses. AFSM simulations revealed a potential severe impact in 2020, with declines in GDP and consumption of 12.9 and 11.7 percent, respectively, and a cumulative loss of GDP of 38 percent for the period 2020-2023. They also highlighted a significant fiscal outlook deterioration that would increase public debt-to-GDP ratios by 18.8 percentage points over 2020-23. The package of counter-cyclical fiscal measures of 3.6 percent of GDP, however, was estimated to cushion the 2020 GDP decline by almost 2 percentage points, as well as protect jobs. A second AFSM application related to the 2018 public investment under-execution showed the importance of improving the efficiency of public investment to have positive macroeconomic and fiscal effects.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 118