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Economic Impact of the Recent Decrease in Social Security Contributions in Ukraine

Author

Listed:
  • Philipp Engler

    (Free University Berlin)

  • Simon Voigts

    (Humboldt University Berlin)

  • Robert Kirchner

    (German Advisory Group)

  • Oleksandra Betliy

    (Institute for Economic Research and Policy Consulting)

Abstract

Social security contributions paid by firms were massively reduced in January 2016. We employ a state-of-the-art DSGE model to assess the effects of this measure on output, private consumption, and other key macroeconomic variables. We find that it significantly boosts GDP and consumption while reducing inflation, and that these effects are sizable both in the short-term and in the long-term. We also report that the short-term impact is significantly stronger under an inflation targeting regime than under exchange rate stabilization.

Suggested Citation

  • Philipp Engler & Simon Voigts & Robert Kirchner & Oleksandra Betliy, 2016. "Economic Impact of the Recent Decrease in Social Security Contributions in Ukraine," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 237, pages 20-26.
    • Handle: RePEc:ukb:journl:y:2016:i:237:p:20-26
    DOI: 10.26531/vnbu2016.237.020
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    File URL: https://journal.bank.gov.ua/en/article/2016/237/02
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    More about this item

    Keywords

    Fiscal devaluation; social security contributions;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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