Proceedings from the ECFIN Workshop "The budgetary implications of structural reforms" - Brussels, 2 December 2005

GDPV growth

unchanged nominal interest rates baseline

Figure 8. Simulated impact of a reduction of the NAIRU in a small euro country (Belgium)

Inflation

Output GAP

Unemployment rate

Potential output growth

Fiscal balance(% of GDP)

Note: The Nairu is assumed to fall progressively by 1.5 percentage points in the first three years of the simulation.

Nominal exchange rate and interest rates are kept unchanged relative to baseline. Real government expenditure
is also kept unchanged at baseline level.

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