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MACROECONOMIC IMPACT OF MODELLED INVESTMENT INTO BUILDING RENEWAL ON GDP OF THE SLOVAK REPUBLIC
Abstract
At present, Slovakia belongs to the fastest growing economies of the European Union, within which since the end of the global economic crisis the Slovak real estate market enjoys the sharpest growth. Despite the dynamic development in new housing construction, it needs to be said that the activity in the sector of the existing buildings still does not reach the necessary standard. The paper is focused on the properties renewal in the private and public sector. The authors see the biggest reserves just in the renewal of the existing buildings, while more than 600 thousand of residential properties need to be renewed and more than 15 thousand buildings - especially schools and hospitals, owned by the state or municipalities. The main aim is a quantitative analysis of the impact of modelled (simulated) investments into the properties renewal and its direct impact on the national economy of the SR. When modelling this impact of the investment on GDP, the authors proceed from two various economic methods. The first is the method of Keynes investment multiplier, which models what impact the investment has on the state economy. Just the flow of investments in the form of household savings, which will go to the properties renewal (especially residential) induces further positive effects on the state economy - on GDP, employment and increase in the production of companies. The second economic method is the production multiplier. Through it, the increased production in one sector of the national economy will influence the increase of the production in other sectors. Via two methods, the induced effects of this investment are investigated. The result is the quantification of financial sources put into the properties renewal on GDP of Slovakia.
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References12
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