Technological change and performance of optimal economic policy: Some results for Austria

Inside the European Monetary Union (EMU), there are efforts to reduce public debt to fulfill the criteria imposed by the Stability and Growth Pact (SGP), which are mandatory for members of the Euro zone. Due to these constraints, public expenditure has been cut in several European countries. Thus, the question of the effects on technological change arises. In this paper, the economic implications for optimal budgetary stabilization under alternative rates of technological change are evaluated for Austria, in order to assess the importance of technological progress for stabilization policy. Copyright (C) 2001 IFAC.