Type: Report
Domain: Macroeconomics
Words: 2750
Slovenia, a member of OECD experienced a serious decline in its economic growth and
unemployment followed by fiscal austerity programs undertaken by its government to recover
from the crisis of 2008. Such steps were taken in view of the outstanding debt burden, excessive
credit growth and low risk assessment in the economy. This paper highlights the effects of fiscal
austerity measures on the Slovenia economy in the context of macroeconomic models of
Keynesian Cross and AD-AS and IS LM framework. The estimation of multiplier effect provides
the cause of such economic slowdown (fall in output, employment and growth) in Slovenia after
the fiscal policies involving a cut in government expenditure and rise in the tax rates was
initiated. The paper ends with a conclusion about the major impacts of such financial
consolidation in the economic condition of Slovenia and provides a short recommendation to the
future policy makers.
