Economic Situation in Slovenia after Financial Crisis

The report intends to focus on the financial situation in Slovenia after the global financial crisis. In addition, detailed information regarding the Slovenian Austerity Program has been revealed in the paper. Equilibrium using different economic models have been discussed in the paper. Moreover, the paper has also identified the impact of multiplier in terms of the fiscal measures of the country.
Introduction
The global financial crisis of 2007 has resulted in large macroeconomic imbalances and there were reduction in economic activity (Eurwork, 2015). This led to fall in fiscal position of the European Union. Government in the European Union has faced pressure to reduce the public expenditure. In case if the Government is unable to pay the debt, then the deficit reduction measures are undertaken for safeguarding the fiscal sustainability of public finances (The Telegraph, 2015). The public expenditures are reduced by imposing employment restrictions and introducing wage policy, pension transfer and social transfer. However, Slovenia undertook the measures of packaged austerity in order to maintain the public finances (Eurwork, 2015).
The measures undertaken by Slovenia include the organizational measures to streamline the costs along with other rationalization measures (United Nations Human Rigths, 2015). The measures covered investment as well as subsidies, labor market policy as well as social security policies. The Government in Slovenia began to merge the expenditure side of the budget in 2012 which involved the public sector costs. The Balancing of Public Finances Act, 2012 aims to achieve sustainable public finances and ensure the macroeconomic stability (United Nations Human Rigths, 2015). The Act involved the fact that the resources should be used carefully and has fixed the costs for various resources. Moreover, the new pension program comprises of the adjustment of existing pension system to the new demographic as well as economic circumstances and ensures the long-term fiscal stability (Investment and Pensions Europe, 2015). The report covers the financial situation in Slovenia after the global financial crisis as well as carries detailed information regarding the Slovenian Austerity Program.
Equilibrium using Keynesian Cross Model in Slovenia
In case of the Keynesian Cross Model, income level is equal to the output level in Slovenian economy. The second part is that there should be equality between the aggregate expenditure and output. Individuals in the economy earn the income based on their production of the goods and services (Barreto, 2015). Hence, it can be said that the income is equivalent to the output level. As the income equals the output levels in Slovenian economy the expenditure levels also equates the output. Every good that are produced in the economy are either consumed or added to the inventory. Keynesian Cross Model indicates that the equation for national income is given as follows.

Where Y is considered as the national income, I is the aggregate investment, C is the aggregate consumption level, G is the government spending, X and M are the exports and imports in the economy (Blanchard, Amighini and Giavazzi, 2010). There is rise in disposable income with the rise in consumption in the economy and as a result, there is rise in aggregate demand in the economy. According to Keynesian Cross Model, there is full employment in the economy of Slovenia where the aggregate demand curve equates the national income (Blanchard, Amighini and Giavazzi, 2010).


Economic Situation in Slovenia after Financial Crisis

Type: Report
Domain: Economic Models
Words: 3250
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