scholarly journals Dynamic Scoring: An Assessment of Fiscal Closing Assumptions

2020 ◽  
Vol 48 (3) ◽  
pp. 340-353
Author(s):  
Rachel Moore ◽  
Brandon Pecoraro
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Policy Change ◽  
Overlapping Generations ◽  
Budget Constraint ◽  
Economic Behavior ◽  
Ricardian Equivalence ◽  
Policy Changes ◽  
Closing Date ◽  
Projected Changes

Analysis of fiscal policy changes using general equilibrium models with forward-looking agents typically requires a counterfactual adjustment to some fiscal instrument in order to achieve the debt sustainability implied by the government’s intertemporal budget constraint. The choice of fiscal instrument can induce economic behavior unrelated to the policy change in models where Ricardian Equivalence does not hold. In this article, we use an overlapping generations framework to examine the effects of alternative fiscal closing assumptions on projected changes to economic aggregates following a change in tax policy, assessing the extent to which the bias associated with a particular fiscal instrument can be mitigated. While we find quantitative differences in projected macroeconomic activity across alternative fiscal instruments, these differences tend to shrink as the closing date is delayed. Ultimately, the choice of fiscal instrument becomes relatively unimportant if fiscal closing can be delayed sufficiently into the future.

The Effects of Monetary Policy Announcements

2019 ◽  
Author(s):  
Chao Gu ◽  
Han Han ◽  
Randall Wright
Keyword(s):  
Monetary Policy ◽  
General Equilibrium ◽  
Overlapping Generations ◽  
Unique Equilibrium ◽  
Policy Changes ◽  
Overlapping Generations Model ◽  
Payment Methods ◽  
Transition Paths ◽  
Sunspot Equilibria ◽  
Monetarist Model

The effects of news (i.e., information innovations) are studied in dynamic general equilibrium models where liquidity matters. As a leading example, news can be announcements about monetary policy directions. In three standard theoretical environments—an overlapping generations model of fiat currency, a new monetarist model accommodating multiple payment methods, and a model of unsecured credit—transition paths are constructed between an announcement and the date at which events are realized. Although the economics is different, in each case, news about monetary policy can induce volatility in financial and other markets, with transitions displaying booms, crashes, and cycles in prices, quantities, and welfare. This is not the same as volatility based on self-fulfilling prophecies (e.g., cyclic or sunspot equilibria) studied elsewhere. Instead, the focus is on the unique equilibrium that is stationary when parameters are constant but still delivers complicated dynamics in simple environments due to information and liquidity effects. This is true even for classically-neutral policy changes. The induced volatility can be bad or good for welfare, but using policy to exploit this in practice seems difficult because outcomes are very sensitive to timing and parameters. The approach can be extended to include news of real factors, as seen in examples.

FISCAL POLICY CHANGES AND BENEFITS

2018 ◽  
Vol 8 (4) ◽  
pp. 747-754
Author(s):  
Alba Ramallari*, ◽  
◽  
Olta Allmuça, ◽  
Gentjan Ramallari
Keyword(s):  
Fiscal Policy ◽  
Policy Changes

Interactive effects between monetary policy and fiscal policy based on dynamic stochastic general equilibrium model

2020 ◽  
pp. 1-12
Author(s):  
Ying Xie
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Control Policy ◽  
Dynamic Stochastic General Equilibrium ◽  
Economic Effects ◽  
Interactive Effects ◽  
Supply Side ◽  
Dynamic Stochastic

From the beginning to the end, monetary policy has focused too much on the control of the supply side. At present, the single supply-based monetary policy is ineffective. Therefore, it is urgent to change the current single direct supply-side regulation and control policy and replace it with a non-single and indirect control policy that combines supply and demand. Based on machine learning algorithms, this paper constructs a monetary policy analysis model based on dynamic stochastic general equilibrium methods to analyze the interactive effects of monetary policy and other policies. Moreover, this paper uses the dynamic stochastic general equilibrium model to simulate and analyze the economic effects of fiscal policy. In addition, this paper compares the economic effects of monetary policy and other policies and conducts verification and analysis through actual data. The obtained results show that the model constructed in this paper achieves the expected effect.

Parties on the Left, Parties on the Right: Electoral Competition and Citizenship Policy Change in Europe

2020 ◽  
pp. 1-19
Author(s):  
John Graeber
Keyword(s):  
Policy Change ◽  
Spatial Competition ◽  
Electoral Competition ◽  
Party Competition ◽  
Policy Changes ◽  
Far Right ◽  
Left Party ◽  
Political Spectrum ◽  
The Right ◽  
Restrictive Policy

Abstract In recent decades, citizenship policies in Europe have changed significantly: some governments have introduced restrictive new requirements for citizenship, while others have made citizenship more accessible. What explains this variation? Despite a burgeoning literature on both comparative citizenship and spatial competition among parties, scholarship on this question remains in its infancy and primarily focused on the influence of the far right. Expanding on this growing research, this article argues that citizenship policy change results from electoral competition on both sides of the political spectrum, in conjunction with governments’ ideological orientation. Using new data on citizenship policies across sixteen European countries from 1975 to 2014, the author demonstrates that left-of-center governments facing increasing levels of left party competition are associated with more accessible policy changes, while increasing levels of party competition from the far right yield more restrictive policy changes under not only right-of-center governments, but also centrist and left-of-center governments as well.

HABIT FORMATION AND GOVERNMENT SPENDING IN A SMALL OPEN ECONOMY

2003 ◽  
Vol 7 (3) ◽  
pp. 407-423 ◽  
Author(s):  
Cem Karayalçin
Keyword(s):  
Fiscal Policy ◽  
General Equilibrium ◽  
Current Account ◽  
Open Economy ◽  
Equilibrium Model ◽  
Government Spending ◽  
Time Preference ◽  
Small Open Economy ◽  
Long Run ◽  
Fiscal Shocks

The paper studies the effects of an expansionary fiscal policy in a general equilibrium model of a small open economy. Households are assumed to possess habit-forming, endogenous rates of time preference. In response to fiscal shocks, the model generates cyclical endogenous persistence and procyclical time paths for consumption, employment, and investment, as well as a countercyclical path for the current account. Furthermore, fiscal shocks are shown to have positive long-run effects on output and negative long-run effects on consumption.

scholarly journals Air Pollution, Allocation of Property Rights, Environmental Issues and Theoretical Overlapping Generations General Equilibrium Modelling

2011 ◽  
Vol 6 (1) ◽  
pp. 23-36
Author(s):  
Jules Tchouto
Keyword(s):  
Air Pollution ◽  
Property Rights ◽  
General Equilibrium ◽  
Overlapping Generations ◽  
Factor Model ◽  
Environmental Issues ◽  
Production Factor ◽  
Abatement Policy ◽  
Greenhouse Gas Abatement ◽  
General Equilibrium Modelling

Air Pollution, Allocation of Property Rights, Environmental Issues and Theoretical Overlapping Generations General Equilibrium ModellingThis paper presents how the environment - considered as a production factor - and other related assumptions can be introduced step by step in a theoretical Overlapping Generations General Equilibrium Model (OLG - GE). The first part shows the behaviors of agents with pollution in the absence of an environmental policy. The second part emphasizes a Greenhouse Gas abatement policy through the allocation of Pollution Permit ownership, which allows property rights on the environment; here we assume a three-factor model: Capital - Labor - Environment. The last part of of the paper highlights one theoretical property about the allocation of pollution permits within a OLG-GE steady state with the environment. To our knowledge, it is the first time that the aforementioned property has been characterized.

Domestic Constraints on Foreign Policy Change in Belarus

2021 ◽  
Vol 11 (1) ◽  
pp. 27-55
Author(s):  
Paul Hansbury
Keyword(s):  
Foreign Policy ◽  
Policy Change ◽  
Interest Group ◽  
International Affairs ◽  
Policy Changes ◽  
Group Competition ◽  
Domestic Constraints ◽  
Foreign Policy Change ◽  
The Relationship ◽  
Policy Shifts

Abstract After 2014 the relationship between Russia and its ally Belarus was strained. Russia was dissatisfied with Belarus’s foreign policy and sought to influence the latter’s international affairs. This article considers the extent of change and continuity in Belarus’s foreign policy, and thus whether Russia’s criticisms reflect consequential shifts, covering the period 2016–2019. The analysis begins with the removal of EU sanctions, which afforded Belarus new opportunities, and ends before the protest movement that emerged ahead of the election in 2020. The study considers three policy areas: international trade; diplomacy more broadly; and foreign policy concerns for prestige. The article argues that Belarus made appreciable policy changes in response to structural pressures in the period 2016–2019, but the parameters of these foreign policy shifts were necessarily highly constrained by domestic interest group competition which prevents Belarus distancing itself from Russia. It concludes with a brief reflection on how the 2020 election protests and repressions affect the dynamics described.

Financial incentives and psychiatric services in Australia: an empirical analysis of three policy changes

2007 ◽  
Vol 2 (1) ◽  
pp. 7-22 ◽  
Author(s):  
D. P. Doessel ◽  
Roman W. Scheurer ◽  
David C. Chant ◽  
Harvey Whiteford
Keyword(s):  
Policy Change ◽  
Financial Incentives ◽  
Psychiatric Services ◽  
Separate Determination ◽  
Policy Changes ◽  
Special Cases ◽  
Medicare Benefit ◽  
Commonwealth Government ◽  
The Government ◽  
New Item

Australia has a national, compulsory and universal health insurance scheme, called Medicare. In 1996 the Government changed the Medicare Benefit Schedule Book in such a way as to create different financial incentives for consumers or producers of out-of-hospital private psychiatric services, once an individual consumer had received 50 such services in a 12-month period. The Australian Government introduced a new Item (319) to cover some special cases that were affected by the policy change. At the same time, the Commonwealth introduced a ‘fee-freeze’ for all medical services. The purpose of this study is two-fold. First, it is necessary to describe the three policy interventions (the constraints on utilization, the operation of the new Item and the general ‘fee-freeze’.) The new Item policy was essentially a mechanism to ‘dampen’ the effect of the ‘constraint’ policy, and these two policy changes will be consequently analysed as a single intervention. The second objective is to evaluate the policy intervention in terms of the (stated) Australian purpose of reducing utilization of psychiatric services, and thus reducing financial outlays. Thus, it is important to separate out the different effects of the three policies that were introduced at much the same time in November 1996 and January 1997. The econometric results indicate that the composite policy change (constraining services and the new 319 Item) had a statistically significant effect. The analysis of the Medicare Benefit (in constant prices) indicates that the ‘fee-freeze’ policy also had a statistically significant effect. This enables separate determination of the several policy changes. In fact, the empirical results indicate that the Commonwealth Government underestimated the ‘savings’ that would arise from the ‘constraint’ policy.

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