POLICY GAMES, DISTRIBUTIONAL CONFLICTS, AND THE OPTIMAL INFLATION

2014 ◽  
Vol 19 (6) ◽  
pp. 1261-1293 ◽  
Author(s):  
Alice Albonico ◽  
Lorenza Rossi
Keyword(s):  
Government Spending ◽  
Economic Activity ◽  
Asset Market ◽  
Fiscal Policies ◽  
Policy Regimes ◽  
Inflation Bias ◽  
Technology Shock ◽  
Distributional Conflicts ◽  
The Cost ◽  
Policy Games

This paper shows that limited asset-market participation (LAMP) generates an extra inflation bias when the fiscal and the monetary authority play strategically. A fully redistributive fiscal policy eliminates the extra inflation bias, but at the cost of reducing Ricardians' welfare. A fiscal authority that redistributes income only partially reduces the inflation bias, but raises government spending. Although a fully conservative monetary policy is necessary to get price stability, it implies a reduction in liquidity-constrained consumers' welfare, in the absence of redistributive fiscal policies. Finally, under a crisis scenario, none of the policy regimes is able to avoid the fall in economic activity when the increase in the fraction of LAMP is coupled with a negative technology shock, whereas optimal policy can avoid recession when it responds to the increase in LAMP proportion alone.

Government spending shocks and economic growth: additional evidence from cyclical behavior of fiscal policy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olumide Olusegun Olaoye ◽  
Ukafor Ukafor Okorie ◽  
Oluwatosin Odunayo Eluwole ◽  
Mahmood Butt Fawwad
Keyword(s):  
Economic Growth ◽  
Business Cycle ◽  
Government Spending ◽  
Generalized Method Of Moments ◽  
The State ◽  
Fiscal Policies ◽  
Asymmetric Effect ◽  
Content Type ◽  
Spending Shocks ◽  
The Business Cycle

PurposeThis study examines the asymmetric effect of government spending on economic growth in Nigeria over the period 1980–2017. Specifically, this study investigates whether the response of economic growth to government spending shocks differs according to the nature of shocks on them. In addition, the authors examine whether the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Design/methodology/approachThe study adopts the linear fiscal reaction function in addition to the nonlinear regression model of Hatemi-J (2011, 2012), Granger and Yoon (2002), which allows us to separate negative shocks from positive shocks to government spending. Similarly, the authors adopt the generalized method of moments (GMM) techniques of Hansen (1982) to account for simultaneity and endogeneity problems inherent in dynamic model.FindingsThe authors’ findings reveal that there is evidence of asymmetry in the government spending–economic growth nexus in Nigeria over the period of study. Specifically, the authors find that the response of economic growth to government spending shocks differs according to the nature of shocks on them. More specifically, the study established that the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Originality/valueUnlike the traditional method of modeling asymmetry, which adopts the simple inclusion of a squared government spending term or by the inclusion of a cubic government spending term, the model adopted in this study allows us to model shocks and show how the responses of economic growth to government expenditure differ according to the nature of shocks on them.

Policy Games: Coordination and Independence in Monetary and Fiscal Policies

1994 ◽  
Vol 1994 (2) ◽  
pp. 139 ◽  
Author(s):  
William D. Nordhaus ◽  
Charles L. Schultze ◽  
Stanley Fischer
Keyword(s):  
Fiscal Policies ◽  
Policy Games

Factors of Influence on the Financial Performance of Agricultural Enterprises

2020 ◽  
pp. 220-227
Author(s):  
Mariia Petrova ◽  
Keyword(s):  
Financial Performance ◽  
Economic Activity ◽  
Complex Problem ◽  
Economic Stability ◽  
Agricultural Enterprises ◽  
Technical Innovations ◽  
Factors Of Influence ◽  
Definition Of ◽  
High Level ◽  
The Cost

The article is devoted to the analysis of factors of influence on the increase in financial performance of agricultural enterprises. The approaches of scientists to determine the essence of the concept of profit are analyzed, their own definition of the concept is formed. The system of proof that the company's task is to make a profit, which is the main stimulus of economic activity is provided. Profit ensures the economic stability of the company, guarantees its financial independence. In order to improve financial results, the company is interested in looking for untapped opportunities and reserves, more efficient ways of using resources, producing products for which there is demand, applying organizational and technical innovations that ensure the efficiency of production, etc. Therefore, the study of factors that affect the level of profitability of the company is a very topical topic that requires further research. It has been established that profit is the main financial result and an incentive for the economic activity of enterprises, the main source of its functioning and development. In today's environment, improving financial results is a complex problem. For their continued growth, the company is interested in updating methods of mobilizing hidden opportunities and reserves, preserving existing and attracting additional resources, upgrading production facilities, focusing on the production of goods of constant and high demand, introducing organizational and technical innovations, and constantly improving the efficiency of production. The need for continuous creative analysis of factors that affect the size of the profit is emphasized. Ways to ensure the growth of financial results of agricultural enterprises by reducing the cost of production, adjusting the prices of products, increasing the technological level of production, changing the structure and volume of products, increasing soil fertility, the level of productivity, the most rational use of labor, material and financial potential are explored. All this, combined with the effect, is able to provide the company with a high level of profitability of operation, increase its level of competitiveness, increase the demand for products, develop export potential, attract new investors, update the fixed capital, improve the fertility of the soil, eventually improve the environment.

Fiskalische Effekte der Kommunalverfassungsreformen der 1990er Jahre in Deutschland / Reforming Local Constitutions in Germany during the 1990s – Their Fiscal Effects

2008 ◽  
Vol 228 (4) ◽  
Author(s):  
Lorenz Blume ◽  
Thomas Döring ◽  
Stefan Voigt
Keyword(s):  
Government Spending ◽  
Direct Democracy ◽  
Structural Break ◽  
Fiscal Policies ◽  
Entry Barriers ◽  
Direct Election ◽  
German States ◽  
The Difference ◽  
Structural Break Test ◽  
The U.S

SummaryMost German states changed their local constitutions during the 1990s in order to become more citizen-friendly. To reach that goal, many local constitutions now allow for the direct election of mayors, initiatives and referenda, and vote-aggregation as well as vote-splitting. Simultaneously, the five-percent threshold was abolished lowering entry barriers. This contribution asks whether these reforms had any effects on local fiscal policies. Based on the reforms that took place in Schleswig-Holstein, Bavaria and Hesse and drawing on a structural break test it is shown that the direct election of mayors has led to lower government spending. The introduction of direct democratic elements, on the other hand, has led to higher expenditures. The empirical results concerning direct democracy substantially deviate from the findings regarding both Switzerland and the U.S.. It is argued that the difference might be due to the lack of fiscal referenda in Germany.

National Fiscal Policies to Fight Recessions in US States

2020 ◽  
Vol 110 ◽  
pp. 131-136
Author(s):  
Karen Dynan ◽  
Douglas Elmendorf
Keyword(s):  
Fiscal Policy ◽  
Fiscal Policies ◽  
State Budget ◽  
Us States ◽  
Economic Downturns ◽  
National Economic ◽  
State Unemployment ◽  
States Experience ◽  
Federal Taxes ◽  
The Cost

Countercyclical fiscal policy generally focuses on national economic downturns. But US states experience significantly different patterns of unemployment, and demand shocks appear to drive much of that variation. State budget rules limit the ability of states to mount their own countercyclical policies. Federal taxes and spending programs have countercyclical effects within states, but the magnitude of those effects depends on policies that were designed based on other considerations (just as the extent of national automatic stabilizers is the result of policies based on other considerations). Enacting countercyclical fiscal policy calibrated to state unemployment rates would reduce the cost of recessions.

Russian arms procurement faces fiscal constraints

2019 ◽  
Keyword(s):  
Economic Development ◽  
Government Spending ◽  
Economic Activity ◽  
Oil Prices ◽  
Gdp Growth ◽  
Content Type ◽  
Fiscal Constraints ◽  
Defence Spending ◽  
Social And Economic Development ◽  
Russian Military

Subject Russian defence spending and procurement. Significance The recent shift in government spending towards social and economic development is being achieved without upsetting strict budgetary discipline, but defence and security expenditure is declining as a share of GDP. Limited procurement plans make life more challenging for the defence industry than for nearly a decade. Impacts Defence firms will find it hard to export weapon types that the Russian military does not want. The GDP growth boost of 2018 is likely to give way to growth of around 1.0-1.5% in 2019, as tax rises dampen economic activity. Higher-than-projected oil prices might allow some surplus budgetary funds to be used to top up planned defence spending commitments.

Fiscal Policy and Government Spending

2010 ◽  
Vol 214 ◽  
pp. F61-F66 ◽  
Author(s):  
Ray Barrell ◽  
Simon Kirby
Keyword(s):  
Fiscal Policy ◽  
Government Spending ◽  
Future Generations ◽  
Coalition Government ◽  
The Third ◽  
Long Run ◽  
Full Capacity ◽  
Government Deficit ◽  
The Government ◽  
The Cost

In June the Coalition Government produced a budget that aimed to reduce the government deficit quickly. The plan was based mainly on cuts in current expenditure and reductions in transfers to individuals. There are four possible reasons for reducing the deficit, and all have been used to justify the policy. The first reason might be that the cost of borrowing is currently too high, and the second could be that if deficits persist the markets could lose confidence and the cost of borrowing would rise. The third reason might be that we have to reduce the debt stock in order that we prepare for the next crisis, whilst the fourth, and perhaps most persuasive in the long run, is that it is unfair to borrow so much and therefore reduce the consumption of future generations. If either of the first two had merit there would be a case for swift consolidation, whilst if the third or fourth predominate, we should not be in any rush to act until output is nearer full capacity.

scholarly journals Clearing Up the Fiscal Multiplier Morass

2017 ◽  
Vol 107 (8) ◽  
pp. 2409-2454 ◽  
Author(s):  
Eric M. Leeper ◽  
Nora Traum ◽  
Todd B. Walker
Keyword(s):  
Government Spending ◽  
Model Specification ◽  
Monetary Model ◽  
Fiscal Multiplier ◽  
Policy Regimes ◽  
Transmission Mechanisms ◽  
Credible Sets ◽  
Short Run ◽  
Observable Data ◽  
Bayesian Prior

We quantify government spending multipliers in US data using Bayesian prior and posterior analysis of a monetary model with fiscal details and two distinct monetary-fiscal policy regimes. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Short-run output multipliers are comparable across regimes—posterior means around 1.3 on impact—but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal—90 percent credible sets of [1.5, 1.9] versus [0.1, 0.4] in present value, when estimated from 1955 to 2016. (JEL E52, E62, E63, H50)

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