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The European Commission's new NAIRU : does it deliver?
Gechert, Sebastian; Rietzler, Katja; Tober, Silke - 2014
The NAIRU is a key component of potential output and as such critically affects output gap estimates. In May 2014, the … European Commission changed its specification of the NAIRU for several countries and lowered its NAIRU estimates - in the case … of Spain from 26.6% to 20.7% for 2015. To test the dependence of the new NAIRU on unemployment versus structural factors …
Persistent link: https://www.econbiz.de/10010458229
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Optimal Level of Government Debt : Matching Wealth Inequality and the Fiscal Sector
Vogel, Edgar - 2014
We calibrate an incomplete markets large scale OLG model to the US income and wealth distribution and examine the effects of alternative government debt levels and adjustment policies on macroeconomic aggregates and welfare. We find that the government should hold negative debt. Due to the high...
Persistent link: https://www.econbiz.de/10013047686
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The Challenge of Debt Reduction During Fiscal Consolidation
Eyraud, Luc - 2013
Studies suggest that fiscal multipliers are currently high in many advanced economies. One important implication is that fiscal tightening could raise the debt ratio in the short term, as fiscal gains are partly wiped out by the decline in output. Although this effect is not long-lasting and...
Persistent link: https://www.econbiz.de/10013084149
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Budgetary Policy and Unemployment Dynamics
von Thadden, Leopold; Kaas, Leo - 2001
We consider a dynamic general equilibrium model with collective wage bargaining and investigate how unemployment dynamics are affected by two types of budgetary policies. In line with traditional reasoning, a balanced-budget rule amplifies fluctuations in the short run, whereas an...
Persistent link: https://www.econbiz.de/10010295705
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Public debt places no burden on future generations under demand shortage
Ogawa, Takayuki; Ono, Yoshiyasu - 2010
In a Diamond-type overlapping-generations setting public debt issuance places no burden on future generations including those who repay the debt if prices and wages are fixed and unemployment occurs in the periods in which public bonds are issued and repaid. Whether the collected fund is spent...
Persistent link: https://www.econbiz.de/10010332241
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Welfare analysis of debt policy during recessions
Ogawa, Takayuki - 2005
This paper develops an overlapping-generations model with nominal wage rigidities and examines the welfare effects of debt policy when unemployment exists. Issues of public debt stimulate aggregate consumption demand and create employment. Future generations then face both increased wage incomes...
Persistent link: https://www.econbiz.de/10010332398
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Budgetary policy and unemployment dynamics
Kaas, Leo; Thadden, Leopold von - 2001
We consider a dynamic general equilibrium model with collective wage bargaining and investigate how unemployment dynamics are affected by two types of budgetary policies. In line with traditional reasoning, a balanced-budget rule amplifies fluctuations in the short run, whereas an...
Persistent link: https://www.econbiz.de/10011419352
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Day of reckoning : output losses from fiscal stabilizations
Ferraro, Domenico; Peretto, Pietro F. - 2018
We derive the quantitative implications of reducing sustained budget deficits (labeled fiscal stabilizations) in the context of a general equilibrium model of innovation-led growth. In the model, innovation comes from entrant firms creating new products and incumbent firms improving own existing...
Persistent link: https://www.econbiz.de/10012125472
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Austerity measures amplified crisis in Spain, Portugal, and Italy
Engler, Philipp; Klein, Mathias - In: DIW economic bulletin 7 (2017) 8, pp. 89-93
The fiscal consolidation efforts of Spain, Italy, and Portugal from 2010 to 2014 did not achieve their goal of reducing the debt-to-GDP ratio in any of the three countries. This Economic Bulletin examines why the spending cuts and tax increases, at times drastic, were unsuccessful and...
Persistent link: https://www.econbiz.de/10011607711
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A sustainable Euro area with exit options
Ritzen, Jozef M. M.; Haas, Jasmina - 2016
All explorations of the future of the Euro show serious risks for its survival in the present form. The road map of the Five EU Presidents presented in 2015 is far from sufficient to reduce the risks of the Euro zone falling apart by Brexit type developments or new economic shocks. The EU...
Persistent link: https://www.econbiz.de/10011582732