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Author: Andrew Hughes Hallett
Publisher: Centre for Economic Policy Research
ISBN: 9781898128823
Category : Budget deficit
Languages : en
Pages : 90
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Book Description
This report examines the stance of fiscal policy in Europe since the 1980s, and the attempts that have been made to restrain the excessive deficits that have built up over the past 15 years. Some attempts to impose discipline have been successful, but many have not. The authors examine the reasons for this, and draw lessons for fiscal policy-making in the future. Current policies could weaken the euro. When the effects of a high deficit in one state are spread across the whole currency union, there is an incentive to run a more expansionary fiscal policy. Unsustainable debt paths can therefore be inflationary. Moreover, the loss of national monetary policies may have caused many governments to rely on fiscal policies to reach their goals. Fiscal discipline has therefore weakened visibly since EMU started, and this has undermined the institutional structure that was set up to enforce that discipline. A new structure will eventually be needed. A key point seems to be that a significant consolidation did take place as countries tried to meet the Maastricht criteria. But having qualified, many member states then relaxed their fiscal policies.The results suggest that, within five years of the launch of the euro, this 'Maastricht Effect' of greater discipline will have been eroded. The authors also find evidence that the smaller countries have shown more discipline than their larger neighbours. In addition, they find that governments have attempted to expand their economies for electoral gain. Finally, they emphasise the crucial role of growth. In fact, the report finds that the reductions in debt that have been achieved so far have been created almost exclusively through economic growth. This appears to be true even under regimes with the strictest expenditure controls. As a result, the Stability and Growth Pact appears not to have produced much discipline; but it has created pro-cyclical pressures and generated uncertainty when its enforcement has been uneven. These results show that it may be preferable to have growth-friendly policies, and to give a more prominent place to debt reductions in a regime of fiscal restraint.
Author: Andrew Hughes Hallett
Publisher: Centre for Economic Policy Research
ISBN: 9781898128823
Category : Budget deficit
Languages : en
Pages : 90
Get Book Here
Book Description
This report examines the stance of fiscal policy in Europe since the 1980s, and the attempts that have been made to restrain the excessive deficits that have built up over the past 15 years. Some attempts to impose discipline have been successful, but many have not. The authors examine the reasons for this, and draw lessons for fiscal policy-making in the future. Current policies could weaken the euro. When the effects of a high deficit in one state are spread across the whole currency union, there is an incentive to run a more expansionary fiscal policy. Unsustainable debt paths can therefore be inflationary. Moreover, the loss of national monetary policies may have caused many governments to rely on fiscal policies to reach their goals. Fiscal discipline has therefore weakened visibly since EMU started, and this has undermined the institutional structure that was set up to enforce that discipline. A new structure will eventually be needed. A key point seems to be that a significant consolidation did take place as countries tried to meet the Maastricht criteria. But having qualified, many member states then relaxed their fiscal policies.The results suggest that, within five years of the launch of the euro, this 'Maastricht Effect' of greater discipline will have been eroded. The authors also find evidence that the smaller countries have shown more discipline than their larger neighbours. In addition, they find that governments have attempted to expand their economies for electoral gain. Finally, they emphasise the crucial role of growth. In fact, the report finds that the reductions in debt that have been achieved so far have been created almost exclusively through economic growth. This appears to be true even under regimes with the strictest expenditure controls. As a result, the Stability and Growth Pact appears not to have produced much discipline; but it has created pro-cyclical pressures and generated uncertainty when its enforcement has been uneven. These results show that it may be preferable to have growth-friendly policies, and to give a more prominent place to debt reductions in a regime of fiscal restraint.
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1498344658
Category : Business & Economics
Languages : en
Pages : 257
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Book Description
This paper explores how fiscal policy can affect medium- to long-term growth. It identifies the main channels through which fiscal policy can influence growth and distills practical lessons for policymakers. The particular mix of policy measures, however, will depend on country-specific conditions, capacities, and preferences. The paper draws on the Fund’s extensive technical assistance on fiscal reforms as well as several analytical studies, including a novel approach for country studies, a statistical analysis of growth accelerations following fiscal reforms, and simulations of an endogenous growth model.
Author: Mr.Giovanni Dell'Ariccia
Publisher: International Monetary Fund
ISBN: 1484359623
Category : Business & Economics
Languages : en
Pages : 54
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Book Description
This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.
Author: Mr.Benedict J. Clements
Publisher: International Monetary Fund
ISBN: 1513567756
Category : Business & Economics
Languages : en
Pages : 450
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Book Description
The sizeable increase in income inequality experienced in advanced economies and many parts of the world since the 1990s and the severe consequences of the global economic and financial crisis have brought distributional issues to the top of the policy agenda. The challenge for many governments is to address concerns over rising inequality while simultaneously promoting economic efficiency and more robust economic growth. The book delves into this discussion by analyzing fiscal policy and its link with inequality. Fiscal policy is the government’s most powerful tool for addressing inequality. It affects households ‘consumption directly (through taxes and transfers) and indirectly (via incentives for work and production and the provision of public goods and individual services such as education and health). An important message of the book is that growth and equity are not necessarily at odds; with the appropriate mix of policy instruments and careful policy design, countries can in many cases achieve better distributional outcomes and improve economic efficiency. Country studies (on the Netherlands, China, India, Republic of Congo, and Brazil) demonstrate the diversity of challenges across countries and their differing capacity to use fiscal policy for redistribution. The analysis presented in the book builds on and extends work done at the IMF, and also includes contributions from leading academics.
Author: Cheryl Williamson Gray
Publisher: World Bank Publications
ISBN: 0821371827
Category : Political Science
Languages : en
Pages : 358
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Book Description
Worldwide experience highlights public finance policies that promote economic growth while meeting the need for fundamental public goods. Macroeconomic stability is essential, as large budget deficits retard growth, followed by moderate levels of public spending - around one-third of GDP or less - especially when governance and public administration are weak; that in turn requires efficiency, particularly in areas such as infrastructure, health, education, and social protection; finally, lower income and payroll tax rates can spur investment and employment. The Eastern European and Central Asia countries pioneered flat income taxes without generally suffering revenue losses as a result, but they have not addressed the problem of high payroll taxes and still face many hurdles in improving the efficiency and effectiveness of public spending and revenue generation.
Author: Guillermo E. Perry
Publisher: World Bank Publications
ISBN: 0821370855
Category : Business & Economics
Languages : en
Pages : 354
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Book Description
Fiscal policy in Latin America has been guided primarily by short-term liquidity targets whose observance was taken as the main exponent of fiscal prudence, with attention focused almost exclusively on the levels of public debt and the cash deficit. Very little attention was paid to the effects of fiscal policy on growth and on macroeconomic volatility over the cycle. Important issues such as the composition of public expenditures (and its effects on growth), the ability of fiscal policy to stabilize cyclical fluctuations, and the currency composition of public debt were largely neglected. As a result, fiscal policy has often amplified cyclical volatility and dampened growth. 'Fiscal Policy, Stabilization, and Growth' explores the conduct of fiscal policy in Latin America and its consequences for macroeconomic stability and long-term growth. In particular, the book highlights the procyclical and anti-investment biases embedded in the region's fiscal policies, explores their causes and macroeconomic consequences, and asesses their possible solutions.
Author: Vitor Gaspar
Publisher:
ISBN: 9789291813483
Category : Banks and banking
Languages : en
Pages : 334
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Book Description
Author: Michael Emerson
Publisher: CEPS
ISBN: 9290797339
Category : Andorra
Languages : en
Pages : 152
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Book Description
Author: Mark Hallerberg
Publisher: Cambridge University Press
ISBN: 1139476270
Category : Political Science
Languages : en
Pages : 235
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Book Description
This book presents a theoretical framework to discuss how governments coordinate budgeting decisions. There are two modes of fiscal governance conducive to greater fiscal discipline, a mode of delegation and a mode of contracts. These modes contrast with a fiefdom form of governance, in which the decision-making process is decentralized. An important insight is that the effectiveness of a given form of fiscal governance depends crucially upon the underlying political system. Delegation functions well when there are few, or no, ideological differences among government parties, whereas contracts are effective when there are many such differences. Empirically, delegation and contract states perform better than fiefdom states if they match the underlying political system. Additional chapters consider why countries have the fiscal institutions that they do, fiscal governance in Central and Eastern Europe, and the role of such institutions in the European Union.
Author: D. Howarth
Publisher: Springer
ISBN: 0230503101
Category : Business & Economics
Languages : en
Pages : 292
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Book Description
David Howarth and Peter Loedel provide a theoretically inspired account of the creation, design and operation of the European Central Bank. Issues explored include the theoretical approaches to the ECB, the antecedents of European monetary authority, the different national perspectives on central bank independence, the complex organisation of the bank, the issues of accountability and the difficult first years of the ECB in operation.
