scholarly journals Fiscal Policy in Europe: Controversies over Rules, Mutual Insurance, and Centralization

2021 ◽  
Vol 35 (2) ◽  
pp. 77-100
Author(s):  
Florin Bilbiie ◽  
Tommaso Monacelli ◽  
Roberto Perotti
Keyword(s):  
Fiscal Policy ◽  
Risk Sharing ◽  
Current Debate ◽  
Stabilization Policy ◽  
Mutual Insurance ◽  
Government Deficit ◽  
The Government ◽  
To Come ◽  
Early Discussion ◽  
Country Specific

We discuss the main fiscal policy issues in Europe, focusing on two that are at the core of the current debate. The first is that the government deficit and debt were, from the outset, the key objects of contention in the debate that led to the creation of the Eurozone, and they still are. The second issue is that a currency union implies the loss of a country-specific instrument, a national monetary policy. This puts a higher burden on fiscal policy as a tool to counteract shocks, a burden that might be even heavier now that the European Central Bank has arguably reached the Zero Lower Bound. Two obvious solutions are mutual insurance (or risk-sharing) amongst countries and a centralized stabilization policy. Yet both have been remarkably difficult to come by, especially due to political constraints. We review and discuss the relative merits of several proposals for increased insurance or centralization, or both. We conclude with an early discussion of the implications of the COVID-19 crisis for European fiscal policy reform and an assessment of the current fiscal measures.

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 Is Real Depreciation or More Government Deficit Expansionary? The Case of Slovenia

2017 ◽  
Vol 12 (1) ◽  
pp. 50-56 ◽  
Author(s):  
Yu Hsing
Keyword(s):  
Exchange Rate ◽  
Fiscal Policy ◽  
Real Exchange Rate ◽  
Central Government ◽  
Empirical Work ◽  
Labor Cost ◽  
Aggregate Output ◽  
The Real ◽  
Government Deficit ◽  
The Government

AbstractThe purpose of this paper is to examine the impacts of the real exchange rate, the government deficit and other relevant variables on aggregate output in Slovenia. Few of the previous studies have applied the AD/AS model to examine the impacts of major macroeconomic variables on aggregate output. This paper makes contributions to the literature by applying a rigorous model to examine how real GDP is affected by the real exchange rate, fiscal policy and other related variables. The exponential GARCH model is applied in empirical work. The paper finds that real depreciation of the Euro may affect Slovenia’s aggregate output positively or negatively and that more central government deficit as a percent of GDP does not affect aggregate output. In addition, Slovenia’s aggregate output is positively associated with the real stock price, the real oil price and real total labor cost or wage and is negatively influenced by the real lending rate and the expected inflation rate. Recent real depreciation of the Euro would help Slovenia’s aggregate output whereas expansionary fiscal policy would not be effective in stimulating the economy.

United States Fiscal Policy for Social Workers

2021 ◽  
Author(s):  
Karen M. Staller
Keyword(s):  
Fiscal Policy ◽  
Social Workers ◽  
Structural Racism ◽  
Federal Revenue ◽  
Deficit Financing ◽  
Government Deficit ◽  
The Government ◽  
And Function ◽  
Role Of The Government

U.S. fiscal policy is of interest to social workers as it concerns issues including structural racism, economic justice, and income inequality. U.S. fiscal policy refers to the role of the government in taxing and spending, the budget appropriations process, and public budgets (including federal and state revenue and spending). Federal revenue includes payroll and income taxes (personal and corporate). Federal outlays include discretionary and mandatory entitlement spending. There are a number of ongoing contentious debates about U.S. fiscal policy, including those involving the size and function of government, deficit financing and borrowing, inequality, and the redistribution of wealth in tax policies.

scholarly journals Fiscal Stability of High-Debt Nations under Volatile Economic Conditions

2014 ◽  
Vol 15 (1) ◽  
pp. 4-22 ◽  
Author(s):  
Robert E. Hall
Keyword(s):  
Fiscal Policy ◽  
The United States ◽  
Budget Constraint ◽  
Economic Conditions ◽  
Implicit Assumption ◽  
Ergodic Distribution ◽  
Intertemporal Budget Constraint ◽  
Us Government ◽  
Government Deficit ◽  
The Government

Abstract Using a recursive empirical model of the real interest rate, GDP growth and the primary government deficit in the United States, I solve for the ergodic distribution of the debt/GDP ratio. If such a distribution exists, the government is satisfying its intertemporal budget constraint. One key finding is that historical fiscal policy would bring the current high-debt ratio back to its normal level of 0.35 over the coming decade. Forecasts of continuing increases in the ratio over the decade make the implicit assumption that fiscal policy has shifted dramatically. In the variant of the model that matches the forecast, the government would not satisfy its intertemporal budget constraint if the policy was permanent. The willingness of investors to hold US government debt implies a belief that the high-deficit policy is transitory.

scholarly journals PERHITUNGAN TINGKAT UTANG MAKSIMAL PEMERINTAH SEBAGAI ACUAN BAGI KEBIJAKAN MONETER DI INDONESIA

2013 ◽  
Vol 2 (1) ◽  
pp. 81
Author(s):  
Doni Satria
Keyword(s):  
Fiscal Policy ◽  
Government Debt ◽  
Stabilization Policy ◽  
Government Budget ◽  
Macroeconomic Stabilization ◽  
Indonesian Government ◽  
Dominance Condition ◽  
Fiscal Dominance ◽  
The Government ◽  
Monetary And Fiscal Policy

The interaction of monetary and fiscal policy in an economy played an important role for macroeconomic stabilization policy. Blanchard (1990) has shown the fiscal domination condition in this policy interaction, fiscal dominance condition could be caused by the accumulation of government debt. This research analyzed the maximum debt that can be accumulated by the government, and still be sustained and could not drag the economy to the fiscal dominance condition. Using the Mendoza and Oviedo (2004) model, we find the maximum accumulated government debt is 45.2 percent of Indonesia GDP. This result is based on the 20 percent of expenditure adjustment of Indonesian government budget

scholarly journals Guillermo E. Perry, Luis Servén, and Rodrigo Suescún (eds.). Fiscal Policy, Stabilisation, and Growth: Prudence or Abstinence? Washington, D.C: The World Bank. 2008. Paperback. 329 Pages. Price not Given.

2010 ◽  
Vol 49 (1) ◽  
pp. 78-80
Author(s):  
Mahmood Khalid
Keyword(s):  
Political Economy ◽  
Fiscal Policy ◽  
Latin American ◽  
Theoretical Models ◽  
Cash Flows ◽  
Current Debate ◽  
Fiscal Policies ◽  
Wide Range ◽  
The Government ◽  
The Impact

‘Fiscal Policy, Stablisation, and Growth’ edited by Guillermo Perry, is an excellent volume covering the typical but current debate on “Does Fiscal Policy Matters”. The book highlights the procyclical and anti-investment biases embedded in fiscal policies, explores their causes and macroeconomic consequences. The text provides empirical substance to the theoretical models and offers policy and recommendations, to help overcome the procyclicality and anti-investment biases of fiscal policies adopted thereof. With wide range of technical and empirical discussions, political economy aspects of the budgets have also been examined. Though the focus of the book is Latin American and the Caribbean countries, the debate is so holistic that it can be used for policy recommendations else where as well. The book is organised in two parts; the first part, spread over four chapters, covers the procyclicality of Fiscal policy while the Part II, comprised of five chapters, elucidates the impact of fiscal policy on economic growth. The discourse takes into account the fiscal policy solvency condition and its imbedded biases towards certain policy options. Chapter 1 provides an excellent overview of what is discussed in the volume. The book argues that excessive focus of fiscal agents on short term indicators of fiscal health, namely the government debt or cash flows, may detract attention from tracking the intertemporal solvency. Such detraction will affect the macroeconomic stability and long-term growth, argues the book. Perverse incentives, that have political economy context, are at the root of flawed policies such as procyclical policies, contends the book.

1896: The McKinley Campaign

2008 ◽  
pp. 371-380
Author(s):  
John Roy Lynch
Keyword(s):  
Fiscal Policy ◽  
Presidential Nomination ◽  
The People ◽  
The Government ◽  
William Mckinley ◽  
To Come ◽  
Made In ◽  
Republican Nomination ◽  
Grover Cleveland

This chapter assesses William McKinley's campaign for presidential nomination. The contest for the Republican nomination in 1896 commenced early in the administration of Grover Cleveland. In 1892, the country had voted to try the experiment of a change in the fiscal policy of the government. But the result was more serious than had been anticipated. It seemed to be apparent, shortly thereafter, that the people were waiting with impatience for the next election day to come so as to enable them to reverse the decision they had made in 1892. In anticipation of that fact, the indications were that the contest for the Republican presidential nomination in 1896 would be a spirited and lively one. It appeared that the leading candidates would be Major William McKinley of Ohio and Speaker Thomas B. Reed of Maine.

scholarly journals Ricardian Equivalence: Evidence From South American Countries

2011 ◽  
Vol 2 (10) ◽  
Author(s):  
Khan A. Mohabbat ◽  
Mohammad Ashraf
Keyword(s):  
Time Horizon ◽  
Ricardian Equivalence ◽  
South American ◽  
National Debt ◽  
Government Bonds ◽  
Economic Agents ◽  
Government Deficit ◽  
Intergenerational Effect ◽  
The Government ◽  
To Come

This study deals with the intergenerational effect of national debt. We try to find out whether the government deficit incurred today has any adverse effect on the generations to come. More specifically, this study tests the notion that any deficit acquired by the government today is offset by the private sector by reducing their consumption and increasing their savings to pay for the debt some times in the future. Since the time horizon for the government is longer than that of the private agents, the private agents altruistically bequeath what they have saved along with interest earned to their offsprings. This study empirically verifies the debt neutrality hypothesis for several South American countries for which workable data were available. The results do not support the debt neutrality hypothesis and show that economic agents consider government bonds net wealth affecting their consumption in a positive way.

scholarly journals Foreign direct investment flows and fiscal discipline in South Africa

2000 ◽  
Vol 3 (2) ◽  
pp. 235-244 ◽  
Author(s):  
N. J. Schoeman ◽  
Z. Clausen Robinson ◽  
T. J. De Wet
Keyword(s):  
South Africa ◽  
Foreign Direct Investment ◽  
Fiscal Policy ◽  
Direct Investment ◽  
Large Degree ◽  
Tax Burden ◽  
Fiscal Discipline ◽  
The Government ◽  
To Come ◽  
The Impact

This paper investigates the impact of fiscal policy on foreign direct investment (PDI) in South Africa during the past 30 years. Casual empirical analysis reveals a definite linkage between FDI flows and variables such as the deficit/GDP ratio, representing fiscal discipline, and the tax burden on foreign investors. This relationship is substantiated by econometric analysis. Given the economy's large degree of dependence on foreign capital, the government may contribute to an investor-friendly environment by adjusting fiscal policy. Some inroads have been made in this regard with the government's Medium-term Expenditure Framework (MTEF), which projects a policy of strict fiscal discipline in years to come. However, the tax burden is still relatively high and, due to its impact on foreign direct capital flows, requires urgent attention.

Book Reviews

2006 ◽  
Vol 56 (4) ◽  
pp. 455-468
Author(s):  
Zoltán Ádám ◽  
László Csaba ◽  
András Bakács ◽  
Zoltán Pogátsa
Keyword(s):  
Developing Countries ◽  
Fiscal Policy ◽  
Monetary Union ◽  
Economic And Monetary Union ◽  
European Studies ◽  
Eu Accession ◽  
East European ◽  
The World ◽  
The Government

István Csillag - Péter Mihályi: Kettős kötés: A stabilizáció és a reformok 18 hónapja [Double Bandage: The 18 Months of Stabilisation and Reforms] (Budapest: Globális Tudás Alapítvány, 2006, 144 pp.) Reviewed by Zoltán Ádám; Marco Buti - Daniele Franco: Fiscal Policy in Economic and Monetary Union. Theory, Evidence and Institutions (Cheltenham/UK - Northampton/MA/USA: Edward Elgar Publishing Co., 2005, 320 pp.) Reviewed by László Csaba; Piotr Jaworski - Tomasz Mickiewicz (eds): Polish EU Accession in Comparative Perspective: Macroeconomics, Finance and the Government (School of Slavonic and East European Studies, University College of London, 2006, 171 pp.) Reviewed by András Bakács; Is FDI Based R&D Really Growing in Developing Countries? The World Investment Report 2005. Reviewed by Zoltán Pogátsa

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