The extent of government deficits and debt has been one of the most debated issues in recent years. However, very little has been contributed about their dynamics . Yet, the issue of entering into and exiting from excessive deficits will be critical in the European monetary union since the...

This paper studies the role of the markup of price over marginal cost for the transmission of fiscal policy shocks. We construct time series of markups allowing for fluctuations in capacity utilization and total factor productivity and use an aggregate production function that is more general...

The empirical evidence testing the validity of the Rational Partisan Theory (RPT) has been mixed. In this article, we argue that the inclusion of other macroeconomic policies and the presence of an independent central bank can partly contribute to explain this inconclusiveness. This article...

Not much cross-country evidence exists on the time-series behavior of individual fiscal instruments in response to the public debt and to output. To remedy this situation, this study provides a set of detailed estimated fiscal reaction functions (or “fiscal rules”) governing these responses...

We assess the response of fiscal policy to developments in asset markets in the US. We estimate fiscal policy rules augmented with aggregate wealth, wealth composition (i.e. financial and housing wealth) and asset prices (i.e. stock and housing prices) using two nonlinear specifications that...

Weighing the current world affairs, there seems to be strong association between natural resources, corruption, and bad economic performance. We empirically investigate the interplay between different institutional qualities and fiscal policy, and their effect on resource-abundant economies’...

We examine the interactions between public and private sector wages per employee in OECD countries. The growth of public sector wages and of public sector employment positively affects the growth of private sector wages. Moreover, total factor productivity, the unemployment rate and the degree...

This study empirically investigates whether macroeconomic effects of fiscal policy are affected by the existence of rule-of-thumb households in Japan. Motivated by existing theoretical formulations, we estimate a consumption function as extended to a Markov switching model and divide the sample...