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On Public Spending and Economic Unions
Broner, Fernando; Martin, Alberto; Ventura, Jaume - 2022
We analyze the conduct of fiscal policy in a financially integrated union in the presence of financial frictions. Frictions create a wedge between the return to investment and the union interest rate. This leads to an over-spending externality. While the social cost of spending is the return to...
Persistent link: https://www.econbiz.de/10014093602
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The Trouble with Cases
Schauer, Frederick - 2010
, environmental, and other litigation has functioned as an alternative form of regulation, the debate asks whether policy-making or … regulation by litigation is more or less socially desirable than more traditional policy-making by ex ante rule-making by … things considered. Rather, we seek to show that any form of regulation that is dominated by high-salience particular cases is …
Persistent link: https://www.econbiz.de/10013151132
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The Household Fallacy
Farmer, Roger E. A. - 2018
We refer to the idea that government must 'tighten its belt' as a necessary policy response to higher indebtedness as the household fallacy. We provide a reason to be skeptical of this claim that holds even if the economy always operates at full employment and all markets clear. Our argument...
Persistent link: https://www.econbiz.de/10012925293
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States in Fiscal Distress
Inman, Robert P. - 2010
The 2007-2010 recession has imposed significant fiscal hardships on state and local governments. The result has been state deficits and the need to increase state taxes, cut spending, and withdraw funds from state rainy day accounts. The primary cause of state budget "gaps" has been the rise in...
Persistent link: https://www.econbiz.de/10013142093
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Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies
Ghosh, Atish R. - 2011
How high can public debt rise without compromising fiscal solvency? We answer this question using a stochastic ability-to-pay model of sovereign default in which risk-neutral investors lend to a government that displays "fiscal fatigue," because its ability to increase primary balances cannot...
Persistent link: https://www.econbiz.de/10013130260
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How Does the U.S. Government Finance Fiscal Shocks?
Berndt, Antje - 2010
We develop a method for identifying and quantifying the fiscal channels that help finance government spending shocks. We define fiscal shocks as surprises in defense spending and show that they are more precisely identified when defense stock data are used in addition to aggregate macroeconomic...
Persistent link: https://www.econbiz.de/10013137024
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Inflation Implications of Rising Government Debt
Giannitsarou, Chryssi - 2010
The intertemporal budget constraint of the government implies a relationship between a ratio of current liabilities to the primary deficit with future values of inflation, interest rates, GDP and narrow money growth and changes in the primary deficit. This relationship defines a natural measure...
Persistent link: https://www.econbiz.de/10012760575
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State Responses to Fiscal Crisis : the Effects of Budgetary Institutionsand Politics
Poterba, James M. - 2021
This paper explores how state fiscal institutions and political circumstances affect the dynamics of state taxes and spending during periods of fiscal stress. The analysis focuses on the late 1980s, when sharp economic downturns in several regions, coupled with increased expenditure demands, led...
Persistent link: https://www.econbiz.de/10013223333
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Interest Rate Implications for Fiscal and Monetary Policies : A Postscript on the Government Budget Constraint
Friedman, Benjamin M. - 2021
An earlier paper by the author investigated the quantitative implications, for the effectiveness of fiscal and monetary policies, of a model treating the determination of long-term interest rates by explicitly imposing the market clearing equilibrium condition that the quantity of bonds issued...
Persistent link: https://www.econbiz.de/10013225039
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Budget Institutions and Fiscal Policy in the U.S. States
Poterba, James M. - 2021
This paper summarizes state balanced budget requirements, and the available empirical evidence on the effect of these rules on state fiscal policies. Existing state rules differ from many current proposals at the federal level. They are typically restricted to part of the state budget, they...
Persistent link: https://www.econbiz.de/10013313653