Fiscal Policy Rules for Stabilisation and Growth : A Simulation Analysis of Deficit and Expenditure Targets in a Monetary Union
We analyse the effectiveness of fiscal policy rules for business cycle stabilisation in a monetary union using a quarterly macro-econometric model of Germany. The simulations compare a deficit target and an expenditure target under a range of supply, demand and fiscal shocks. Their effects are evaluated by their impact on prices and output. The analysis demonstrates that in general the deficit target of the stability pact leads to less stabilisation than an expenditure target. The results suggest that the deficit rule of the stability pact should be replaced with an expenditure rule augmented by medium-term debt targets.
Year of publication: |
2004
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Authors: | Brück, Tilman ; Zwiener, Rudolf |
Publisher: |
Berlin : Deutsches Institut für Wirtschaftsforschung (DIW) |
Subject: | Antizyklische Finanzpolitik | EU-Stabilitätspakt | Währungsunion | Wirtschaftspolitische Wirkungsanalyse | Simulation | Haushaltsdefizit | Öffentliche Ausgaben | Schätzung | Deutschland | fiscal policy | international policy coordination | simulation |
Saved in:
freely available
Series: | DIW Discussion Papers ; 427 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 389380407 [GVK] hdl:10419/18163 [Handle] RePEc:diw:diwwpp:dp427 [RePEc] |
Classification: | F42 - International Policy Coordination and Transmission ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; E37 - Forecasting and Simulation |
Source: |
Persistent link: https://www.econbiz.de/10010260720