The need of fiscal consolidation is likely to dominate the policy agenda in the next decade; starting from statistical evidence on the conduct of fiscal policy in the EMU area over the last decade, this paper addresses the optimality of alternative fiscal consolidation strategies. We explore the...

The ongoing massive fiscal policy stimulus triggered increasing concerns on the potential impact on interest rate levels, as economic theory predicts. Particularly, the deterioration of some EMU countries' fiscal positions has been putting at risk Eurozone' financial stability. In this paper, we...

This paper offers a formal analysis of the relationship between changes in government primary balance and debt-to-GDP ratio. It establishes the conditions under which a fiscal consolidation increases, instead of decreasing, the stock of government liabilities relative to aggregate output.A...

We analyze fiscal rules within a Monetary Union in the presence of (i) asymmetric information about member states' potential output and, therefore, output gap and (ii) bail-out among member states. In our framework, bail-out lowers the scope for signalling (discrimination) by member states...

This paper studies fiscal policy behavior with regard to sustainability for the group of the eight eastern new member states (NMS) which joined the European Union (EU) in 2004. Using the approach of Bohn (1995, 1998) the fiscal reaction function is estimated for the years 1995 until 2013....

We analyze fiscal rules within a Monetary Union in the presence of (i) asymmetric information on member states' potential output and (ii) bail-out among member states. The first-best deficit is contingent on the cycle, that is, on member states' output gap. In the presence of asymmetric...

This paper empirically studies non-linearities in debt sustainability analysis by resorting to the modern estimation technique of panel smooth transition regression (PSTR). We assess euro area debt sustainability by analysing the reaction of the primary balance to changes in public debt,...

This paper studies heterogeneity in the fiscal reaction function for European Union members by resorting to the unconditional quantile regression estimation. Based on annual observations spanning from 2005 to 2018, the results point to significant asymmetries concerning the fiscal response...