The macroeconomic and cross-generational effects of policies aiming at public debt reduction are shown to depend crucially on how wages respond to the associated tightening of fiscal policy. In order to dampen the adverse transitional effects on the macroeconomy and in order to protect currently...

This paper analyses the effects of cuts in the marginal tax rates on income from labour and capital on the macroeconomy and on the intergenerational distribution of welfare in a small open economy. For this purpose we et up a computable general equilibrium model incorporating overlapping...

This paper studies some macroeconomic effects in a small open economy of the fiscal policy rules implied by the Maastricht convergence criteria. The focus is upon the adjustment process in the run-up to EMU. Two country-specific shocks leading to higher public debts are considered: a fall in the...

Flexibility in fiscal policy is a necessary ingredient in a policy package for EMU. Even with strong endogenous shock absorbers, such as real wage flexibility, fiscal policy can speed up the stabilisation process in response to demand shocks. If real wages are rigid, as they typically are in...

A defining feature of transition economies is the expansion of the private sector. Motivated by the observation that new enterprises in transition economies seem to have a strong preference for recruiting young people, this paper studies intergenerational redistribution following from market...