Chapter 3. Will It Hurt?
... The main findings of the chapter are as follows: •• Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point. Domes ...
... The main findings of the chapter are as follows: •• Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point. Domes ...
Fiscal Rules at a Glance: Country Details from a New Dataset
... This paper provides country-specific information on fiscal rules in use in 81 countries from 1985 to end-September 2012.1 It accompanies and updates the July 2012 Working Paper “Fiscal Rules in Response to the Crisis—Toward the ‘Next Generation’ Rules: A New Dataset” (Schaechter, Kinda, Budina, and ...
... This paper provides country-specific information on fiscal rules in use in 81 countries from 1985 to end-September 2012.1 It accompanies and updates the July 2012 Working Paper “Fiscal Rules in Response to the Crisis—Toward the ‘Next Generation’ Rules: A New Dataset” (Schaechter, Kinda, Budina, and ...
COM SEC(2008)2092 EN
... Key European and ECOFIN Council statements on the role of quality of public finances, 2000-2007 Changes in the expenditure-to-GDP ratio between 19801985 and 2003-2007 Empirical evidence for Wagner's Law: a summary of ...
... Key European and ECOFIN Council statements on the role of quality of public finances, 2000-2007 Changes in the expenditure-to-GDP ratio between 19801985 and 2003-2007 Empirical evidence for Wagner's Law: a summary of ...
The Government`s fiscal framework
... 1.14 They set out how the Government intends to support the economy now, ensure mediumterm sustainability, and maintain public investment. In advance of the public finances reaching cyclically-adjusted current balance, the Government will set out how it will apply the fiscal framework in future to c ...
... 1.14 They set out how the Government intends to support the economy now, ensure mediumterm sustainability, and maintain public investment. In advance of the public finances reaching cyclically-adjusted current balance, the Government will set out how it will apply the fiscal framework in future to c ...
EUROPEAN ECONOMY National Expenditure Rules: Why, How and When
... also to have increased the effectiveness of budget balance rules. · A second element indicating the importance of spending control and the use of expenditure rules to effectively ensure an adequate monitoring of spending developments is related to the origins of the fiscal imbalances across EU count ...
... also to have increased the effectiveness of budget balance rules. · A second element indicating the importance of spending control and the use of expenditure rules to effectively ensure an adequate monitoring of spending developments is related to the origins of the fiscal imbalances across EU count ...
finances in EMU – 2008 - European Commission
... Policy-mix in the euro area Budget balance in 2006 SCP plans for 2007 and outcomes: composition of differences (% of GDP) Apparent tax elasticities in the EA-15 and the EU-27 Planned change in the structural balance - Unweighted ...
... Policy-mix in the euro area Budget balance in 2006 SCP plans for 2007 and outcomes: composition of differences (% of GDP) Apparent tax elasticities in the EA-15 and the EU-27 Planned change in the structural balance - Unweighted ...
Green Paper on the feasibility of introducing Stability Bonds
... Several empirical analyses compared the yield of hypothetical commonly-issued bonds with the average yield of existing bonds. These analyses assume that there is neither a decline in the liquidity premium nor any enhancement in the credit risk by the common issuance beyond the average of the rating ...
... Several empirical analyses compared the yield of hypothetical commonly-issued bonds with the average yield of existing bonds. These analyses assume that there is neither a decline in the liquidity premium nor any enhancement in the credit risk by the common issuance beyond the average of the rating ...
Swedish Fiscal Policy - Finanspolitiska rådet
... kind, fiscal policy will have a countercyclical effect via the automatic stabilisers. In the event of very large demand and supply shocks, an active fiscal policy may be needed. The fiscal measures in this case will help limit the rise in unemployment, reduce the risk of unemployment becoming entren ...
... kind, fiscal policy will have a countercyclical effect via the automatic stabilisers. In the event of very large demand and supply shocks, an active fiscal policy may be needed. The fiscal measures in this case will help limit the rise in unemployment, reduce the risk of unemployment becoming entren ...
An exploration of real-time revisions of output
... In addition to real-time revisions in output gaps, we also explore revisions in their changes. This is also relevant since the fiscal stance is often defined as a monotonic function of the change in the output gap. In the event that consecutive revisions of the output gap cancel one another, this wo ...
... In addition to real-time revisions in output gaps, we also explore revisions in their changes. This is also relevant since the fiscal stance is often defined as a monotonic function of the change in the output gap. In the event that consecutive revisions of the output gap cancel one another, this wo ...
Fiscal policy to stabilise the economy in the EMU
... the economy can be caught in a liquidity trap: because nominal interest rates cannot be negative, it is impossible also to achieve negative real interest rates if prices are falling. Japan is a recent example (see EEAG, 2003). But also in more normal situations, there can be limitations to monetary ...
... the economy can be caught in a liquidity trap: because nominal interest rates cannot be negative, it is impossible also to achieve negative real interest rates if prices are falling. Japan is a recent example (see EEAG, 2003). But also in more normal situations, there can be limitations to monetary ...
Fiscal consolidation
... In the columns for the start, duration, size and intensity of consolidation, the results for five thresholds are indicated in the following order: i) very small: continuous improvement in the budget balance (i.e. the episode lasts as long as the budget balance improves), ii) medium-sized: 1 percenta ...
... In the columns for the start, duration, size and intensity of consolidation, the results for five thresholds are indicated in the following order: i) very small: continuous improvement in the budget balance (i.e. the episode lasts as long as the budget balance improves), ii) medium-sized: 1 percenta ...
Cyclicality of Fiscal Policy over the Business Cycle: An Empirical
... policy over the business cycle by running GMM regressions of the detrended log of government consumption as dependent variable and the detrended log of real GDP as an explanatory variable. He finds evidence that government consumption and output are positively related for the cases of the developin ...
... policy over the business cycle by running GMM regressions of the detrended log of government consumption as dependent variable and the detrended log of real GDP as an explanatory variable. He finds evidence that government consumption and output are positively related for the cases of the developin ...
Riding the Roller Coaster: Fiscal Policies of Nonrenewable
... fiscal revenue in many Latin American and Caribbean (LAC) countries recorded sharp swings correlated with economic growth developments in the world and in the region. Against this background, the present paper analyzes the fiscal policies of nonrenewable resource exporting countries (NRECs) in LAC d ...
... fiscal revenue in many Latin American and Caribbean (LAC) countries recorded sharp swings correlated with economic growth developments in the world and in the region. Against this background, the present paper analyzes the fiscal policies of nonrenewable resource exporting countries (NRECs) in LAC d ...
Chapter 2. Can Fiscal Policy Stabilize Output?
... How Fiscal Policy Influences Economic Activity To stabilize output in the near term, governments can affect economic activity and jobs by influencing domestic demand for goods and services.2 They can do this directly by changing public investment and consumption or indirectly by adjusting taxes and ...
... How Fiscal Policy Influences Economic Activity To stabilize output in the near term, governments can affect economic activity and jobs by influencing domestic demand for goods and services.2 They can do this directly by changing public investment and consumption or indirectly by adjusting taxes and ...
Working PaPer SerieS ToWardS eXPendiTUre rULeS and FiScaL
... macroeconomic stability, financial integration, and growth convergence in Europe. However, EMU has also got a mixed record as regards public finances and public debt developments, the emergence of macroeconomic imbalances in some countries and the interplay between the two. A number of studies have ...
... macroeconomic stability, financial integration, and growth convergence in Europe. However, EMU has also got a mixed record as regards public finances and public debt developments, the emergence of macroeconomic imbalances in some countries and the interplay between the two. A number of studies have ...
WHEN IT RAINS, IT POURS: PROCYCLICAL CAPITAL FLOWS AND
... contractionary in bad times. Talvi and Végh (2000) argued that, far from being a phenomenon peculiar to Latin America, procyclical fiscal policy seems to be the norm in the developing world just as fiscal policy is acyclical in the advanced economies. Using a different econometric approach, Braun (2 ...
... contractionary in bad times. Talvi and Végh (2000) argued that, far from being a phenomenon peculiar to Latin America, procyclical fiscal policy seems to be the norm in the developing world just as fiscal policy is acyclical in the advanced economies. Using a different econometric approach, Braun (2 ...
Strengthening Malta`s Fiscal Framework
... 2. Strengthening the National Fiscal Framework Fiscal governance in the EU is regulated by the Stability and Growth Pact which sets targets for medium term budgetary objectives (MTO), the required structural adjustment path (known as the structural effort) needed to reach the MTO, defines “excessi ...
... 2. Strengthening the National Fiscal Framework Fiscal governance in the EU is regulated by the Stability and Growth Pact which sets targets for medium term budgetary objectives (MTO), the required structural adjustment path (known as the structural effort) needed to reach the MTO, defines “excessi ...
Discretionary Fiscal Policy and Optimal Monetary Policy
... Literature on optimal monetary and fiscal policy in currency areas is rapidly growing. In this context, the nominal exchange rate as a shock absorbing device is not available and, in the presence of nominal rigidities, fiscal policy is regarded as a potentially alternative instrument to deal with as ...
... Literature on optimal monetary and fiscal policy in currency areas is rapidly growing. In this context, the nominal exchange rate as a shock absorbing device is not available and, in the presence of nominal rigidities, fiscal policy is regarded as a potentially alternative instrument to deal with as ...
- Public Intelligence
... While fiscal rules can serve different goals, the focus here is primarily on rules that promote fiscal sustainability. How do different rules comply with this objective? (see Table 1 and Appendix IVb): ...
... While fiscal rules can serve different goals, the focus here is primarily on rules that promote fiscal sustainability. How do different rules comply with this objective? (see Table 1 and Appendix IVb): ...
full text
... decentralisation and growth when decentralisation is increasing from low levels, but that as decentralisation increased, the relation eventually turned negative in a cross section of high-income OECD economies using annual data for a period 1973 – 1998. There is a group of studies that have found no ...
... decentralisation and growth when decentralisation is increasing from low levels, but that as decentralisation increased, the relation eventually turned negative in a cross section of high-income OECD economies using annual data for a period 1973 – 1998. There is a group of studies that have found no ...
Fiscal credibility and central bank credibility: how do we
... is that a disinflationary monetary policy can cause a fiscal imbalance. The reason is that the basic interest rate is the main monetary policy instrument. But, in countries such as Brazil, public debt is strongly indexed to the interest rate. Therefore, increases in interest rate to reach the inflat ...
... is that a disinflationary monetary policy can cause a fiscal imbalance. The reason is that the basic interest rate is the main monetary policy instrument. But, in countries such as Brazil, public debt is strongly indexed to the interest rate. Therefore, increases in interest rate to reach the inflat ...
Size, Determinants, and Use in Macroeconomic Projections
... design.2 Underestimating multipliers may lead countries to set unachievable fiscal targets, and miscalculate the amount of adjustment necessary to curb their debt ratio (Eyraud and Weber, 2012, 2013). This could affect the credibility of fiscal consolidation programs. In addition, authorities may en ...
... design.2 Underestimating multipliers may lead countries to set unachievable fiscal targets, and miscalculate the amount of adjustment necessary to curb their debt ratio (Eyraud and Weber, 2012, 2013). This could affect the credibility of fiscal consolidation programs. In addition, authorities may en ...
ON AMENDMENTS AND ADDENDA TO THE BUDGET SYSTEM LAW
... "25а) Fiscal policy includes decisions reached or activities taken by government bodies in relation to the public revenues and proceeds and expenses and expenditures and accumulation of public assets and liabilities with the aim to influence the economic trends and achievement of fiscal policy targe ...
... "25а) Fiscal policy includes decisions reached or activities taken by government bodies in relation to the public revenues and proceeds and expenses and expenditures and accumulation of public assets and liabilities with the aim to influence the economic trends and achievement of fiscal policy targe ...
... Fiscal Imbalance and Fiscal Stimulus Fiscal imbalance also addresses a different question than whether increased expenditure during recessions—fiscal stimulus—is a desirable or effective way to moderate the business cycle fluctuations of the aggregate economy.5 The standard Keynesian argument for su ...
European Economy. Reports and Studies. 3/2000. Public finances in
... desired stabilising effect. Instead of reducing government deficits and debt ratios when economic growth was favourable, governments have tended to undertake a dis1 ...
... desired stabilising effect. Instead of reducing government deficits and debt ratios when economic growth was favourable, governments have tended to undertake a dis1 ...
Stability and Growth Pact
The Stability and Growth Pact (SGP) is an agreement, among the 28 Member states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126 of the Treaty on the Functioning of the European Union, it consists of fiscal monitoring of members by the European Commission and the Council of Ministers, and the issuing of a yearly recommendation for policy actions to ensure a full compliance with the SGP also in the medium-term. If a Member State breaches the SGP's outlined maximum limit for government deficit and debt, the surveillance and request for corrective action will intensify through the declaration of an Excessive Deficit Procedure (EDP); and if these corrective actions continue to remain absent after multiple warnings, the Member State can ultimately be issued economic sanctions. The pact was outlined by a resolution and two council regulations in July 1997. The first regulation ""on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies"", known as the ""preventive arm"", entered into force 1 July 1998. The second regulation ""on speeding up and clarifying the implementation of the excessive deficit procedure"", known as the ""dissuasive arm"", entered into force 1 January 1999.The purpose of the pact was to ensure that fiscal discipline would be maintained and enforced in the EMU. All EU member states are automatically members of both the EMU and the SGP, as this is defined by paragraphs in the EU Treaty itself. The fiscal discipline is ensured by the SGP by requiring each Member State, to implement a fiscal policy aiming for the country to stay within the limits on government deficit (3% of GDP) and debt (60% of GDP); and in case of having a debt level above 60% it should each year decline with a satisfactory pace towards a level below. As outlined by the ""preventive arm"" regulation, all EU member states are each year obliged to submit a SGP compliance report for the scrutiny and evaluation of the European Commission and the Council of Ministers, that will present the country's expected fiscal development for the current and subsequent three years. These reports are called ""stability programmes"" for eurozone Member States and ""convergence programmes"" for non-eurozone Member States, but despite having different titles they are identical in regards of the content. After the reform of the SGP in 2005, these programmes have also included the Medium-Term budgetary Objectives (MTO's), being individually calculated for each Member State as the medium-term sustainable average-limit for the country's structural deficit, and the Member State is also obliged to outline the measures it intends to implement to attain its MTO. If the EU Member State does not comply with both the deficit limit and the debt limit, a so-called ""Excessive Deficit Procedure"" (EDP) is initiated along with a deadline to comply, which basically includes and outlines an ""adjustment path towards reaching the MTO"". This procedure is outlined by the ""dissuasive arm"" regulation.The SGP was initially proposed by German finance minister Theo Waigel in the mid-1990s. Germany had long maintained a low-inflation policy, which had been an important part of the German economy's strong performance since the 1950s. The German government hoped to ensure the continuation of that policy through the SGP, which would ensure the prevalence of fiscal responsibility, and limit the ability of governments to exert inflationary pressures on the European economy. As such, it was also described to be a key tool for the Member States adopting the euro, to ensure that they did not only meet the Maastricht convergence criteria at the time of adopting the euro, but kept on to comply with the fiscal criteria for the following years.