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Over-Optimistic Official Forecasts in the Eurozone and Fiscal Rules
Frankel, Jeffrey A. - 2012
. The members of the eurozone are supposedly constrained by the fiscal caps of the Stability and Growth Pact. Yet ever since …:•Governments' budget forecasts are biased in the optimistic direction, especially among the Eurozone countries, especially when they have …-optimistic during booms.•Despite the well-known tendency of eurozone members to exceed the 3% cap on budget deficits, often in …
Persistent link: https://www.econbiz.de/10013102194
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Do Balanced Budget Rules Work? U.S. Experience and Possible Lessons for the Emu
Inman, Robert P. - 2021
The `Excessive Deficit Procedure' of the Maastricht Treaty on Economic and Monetary Union proposes two fiscal convergence conditions for entry and continued membership in the EMU: 1) a country's overall budget deficit for each fiscal year must be equal to or below 3% of GDP, and 2) a country's...
Persistent link: https://www.econbiz.de/10013223574
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A Surplus of Ambition : Can Europe Rely on Large Primary Surpluses to Solve its Debt Problem?
Eichengreen, Barry - 2014
IMF forecasts and the EU's Fiscal Compact foresee Europe's heavily indebted countries running primary budget surpluses of as much as 5 percent of GDP for as long as 10 years in order to maintain debt sustainability and bring their debt/GDP ratios down to the Compact's 60 percent target. We show...
Persistent link: https://www.econbiz.de/10013050287
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Saving Europe? : The Unpleasant Arithmetic of Fiscal Austerity in Integrated Economies
Mendoza, Enrique G. - 2014
What are the macroeconomic effects of tax adjustments in response to large public debt shocks in highly integrated economies? The answer from standard closed-economy models is deceptive, because they underestimate the elasticity of capital tax revenues and ignore cross-country spillovers of tax...
Persistent link: https://www.econbiz.de/10013046730
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The Permanent Effects of Fiscal Consolidations
Fatás, Antonio - 2016
The global financial crisis has permanently lowered the path of GDP in all advanced economies. At the same time, and in response to rising government debt levels, many of these countries have been engaging in fiscal consolidations that have had a negative impact on growth rates. We empirically...
Persistent link: https://www.econbiz.de/10012987599
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The Stability and Growth Pact as an Impediment to Privatizing Social Security
Razin, Assaf; Sadka, Efraim - 2022
The aging of the population shakes the confidence in the economic viability of pay-as-you-go social security systems. We demonstrate how in a political-economy framework the shaken cofidence leads to the downsizing of the social security-system, and to the emergence of supplemental individual...
Persistent link: https://www.econbiz.de/10013322100
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How Do Monetary and Fiscal Policy Interact in the European Monetary Union?
Canzoneri, Matthew B. - 2012
Formation of the Euro area raises new questions about the coordination of monetary and fiscal policy. Using a New Neoclassical Synthesis (NNS) model, we show that a common monetary policy, responding to area-wide aggregates, has asymmetric effects on countries within the union, depending on...
Persistent link: https://www.econbiz.de/10013100660
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The Euro and Fiscal Policy
Fatás, Antonio - 2010
The paper provides and empirical characterization of fiscal policy in the euro area and in a group of twenty-two OECD economies over the period from 1970 until 2007. Using the cyclically-adjusted fiscal balance we document that policy in the euro area has been mildly pro-cyclical. The adoption...
Persistent link: https://www.econbiz.de/10012757871
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Government Investment and the European Stability and Growth Pact
Bassetto, Marco - 2010
We consider the effect of excluding government investment from the deficit subject to the limits of the European Stability and Growth Pact. In the model we consider, residents of a given country discount future costs and benefits of government spending more than efficiency would dictate, because...
Persistent link: https://www.econbiz.de/10012759973
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The Ecb's Fiscal Policy
Sinn, Hans-Werner - 2018
While the ECB helped mitigate the euro crisis in the aftermath of Lehman, it has stretched its monetary mandate and moved into fiscal territory. This text describes and summarizes the crucial role played by the ECB in the intervention spiral resulting from its bid to manage the crisis. It also...
Persistent link: https://www.econbiz.de/10012918640