One scheme fits all: A central fiscal capacity for the EMU targeting eurozone, national and regional shocks
This paper proposes a central fiscal capacity for the euro area that generates transfers in response to euro area, country, and region-specific shocks. The main novelty of this fiscal capacity is that it allows a joint response to these three types of shocks within a single scheme. Based on NUTS3 regional data over the last two decades and regional fiscal multiplier estimates, our analysis shows that - with a limited risk of moral hazard - substantial stabilisation could have been achieved in response to the eurozone and regional shocks, while country-specific shocks were on average less severe and therefore needed less stabilisation.
Year of publication: |
2022
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Authors: | Beetsma, Roel ; Cimadomo, Jacopo ; Van Spronsen, Josha |
Publisher: |
Frankfurt a. M. : European Central Bank (ECB) |
Subject: | Central scal capacity | macroeconomic stabilisation | multilevel factor model | Bayesian inference |
Saved in:
freely available
Series: | ECB Working Paper ; 2666 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
ISBN: | 978-92-899-5115-9 |
Other identifiers: | 10.2866/103730 [DOI] 1806890011 [GVK] hdl:10419/264492 [Handle] RePEc:ecb:ecbwps:20222666 [RePEc] |
Classification: | c38 ; E32 - Business Fluctuations; Cycles ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization |
Source: |
Persistent link: https://www.econbiz.de/10013367997