In this paper we characterise fiscal policy in terms of non-linear processes. We find that government spending and taxes can be described as being non-linear trend stationary processes instead of unit roots. A long run equilibrium relationship - a non-linear co-trend - does exist between the two...

The authors study the implications of fiscal policy behaviour for sovereign risk in a framework that determines a country's fiscal limit, the point at which, for economic or political reasons, taxes and spending can no longer adjust to stabilize debt. A real business cycle model maps the...

Should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of non-traded to traded goods? This paper considers normative fiscal policy implications of sectoral adjustment costs in a two-sector model with overlapping...

To analyse the most important aspects of the Secular Stagnation hypothesis, this paper considers the effects of hysteresis in potential output in a New-Keynesian model that is extended with endogenous potential output. To do so, a number of simulations of relevant scenarios is undertaken. It is...

Aufgrund der seit langem geführten Debatte um das Für und Wider der Nutzung des Politikinstruments der Staatsverschuldung wissen wir recht viel darüber, was Experten (z. B. Finanzpolitiker/‌-‍wissenschaftler) von Haushaltskonsolidierung, Deficit-Spending oder Verschuldungsgrenzen halten....

If women make different economic decisions than men on average, then an increase in women's influence in the political and economic spheres of society might change economic outcomes. In this note, we focus on the impact of female enfranchisement on fiscal policy outcomes. We present a simple...

In the aftermath of the global financial crisis and great recession, many countries face substantial deficits and growing debts. In the United States, federal government outlays as a ratio to GDP rose substantially from about 19.5 percent before the crisis to over 24 percent after the crisis. In...

The paper studies empirically fiscal policies around elections in 25 developing countries as affected by the exchange regime. It is argued that countries with flexible exchange regimes are less likely to engage in expansionary fiscal policies before elections because such policies can result in...