The framework for fiscal policy coordination in EMU has been in effect for three years. The experience gained shows that the rule-based approach provides in principle a feasible solution for policy coordination among a large number of heterogeneous countries whose joint interest is to safeguard...

This paper considers the effects of fiscal policy on private consumption in a framework that encompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis. The model is built on Blanchard's stochastic model of intertemporal optimization with...

In Finland the private sector borrowing started to rise rapidly in conjunction with the liberalization of capital movements and deregulation of the domestic financial sector during the second half of the 1980s. The financial deregulation coincided with and amplified an economic boom marked by...

Cyclically adjusted government budget balances have become increasingly popular as a means of analysing the fiscal situation and changes in policy that result from the intentional actions of the government. As the actual budget balances are affected both by cyclical factors ('automatic...

It is widely recognised that fiscal policy will have greater responsibilities for cyclical stabilisation in the EMU, given the loss of the monetary instrument at national level. At the same time, the EMU’s budgetary framework emphasises the need to rely on automatic fiscal stabilisers, rather...

The paper presents a theoretical model of private consumption that emcompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis. The effects of fiscal policy on private consumption are analyzed in an extended framework built on Blanchard's...