Search results for "Fiscal union"

Deficit sustainability and inflation in EMU: An analysis from the Fiscal Theory of the Price Level

2007

Price determination theory typically focuses on the role of monetary policy, while the role of fiscal policy is usually neglected. From a different point of view, the Fiscal Theory of the Price Level takes into account monetary and fiscal policy interactions and assumes that fiscal policy may determine the price level, even if monetary authorities pursue an inflation targeting strategy. In this paper we try to test empirically whether the time path of the government budget in EMU countries would have affected price level determination. Our results point to the sustainability of fiscal policy in all the EMU countries but Finland, although no firm conclusions can be drawn about the prevalence…

Exploring Countercyclical Fiscal Policy in Local Government: Moving Beyond an Aggregated Approach

2014

There is a renewed interest in the fiscal health of local governments in the United States, which is being driven in part by academic research, professional organizations, and the economy. This renewed interest also includes how local governments use their cash reserves for countercyclical fiscal policy, which is a stream of research that has received minimal attention in the literature. We respond in this article by exploring how 97 North Carolina counties used their cash reserves from 2005 to 2012, which includes the great recession of 2008 and 2009. Our findings provide some evidence of countercyclical fiscal policy in local government when exploring the use of cash reserves from an aggr…

Fiscal and regulatory federalism in the European Union

1995

This contribution summarizes some quantitative results and presents relevant policy-oriented conclusions obtained from research program No. PBS91-0363. It is mainly supported by the Inter-ministerial Committee on Science and Technology of the Spanish government, which was carried out at the Public Finance and Public Sector Economics Research Unit of University of Valencia (Spain) to analyze, from a fiscal and regulatory point of view, the dynamic characteristics of federalism in the European Union. The research was performed in order to contribute to the establishment of the basis for the acceleration of the economic European integration and the future constitution of the United States of E…

Is the budget deficit sustainable when fiscal policy is non-linear? The case of Spain

2006

In this paper, we re-examine the long-run sustainability of budget deficits, when fiscal policy is conducted as a non-linear process. Our empirical methodology makes use of recent developments on threshold cointegration that consider the possibility of a non-linear relationship between government expenditures and revenues. The analysis is applied to the case of Spain, a country that has recently accomplished an important fiscal consolidation. Overall, our results suggest the presence of significant non-linear effects in Spanish fiscal policy, so that fiscal authorities would cut deficits only if they are ‘large’, which would assure in turn their long-run sustainability.

A Strategic Management Approach to the Problems of EU taxation

2004

This paper adopts a strategic management approach (objectives, strategy, structure, control) to the study of the European Union's taxation problems. Union of States have some strengths vis-a-vis individual States. However, to ensure that all States benefit, they need constant redistribution. As opposed to fiscal problems of unitary states, Unions of States have additional problems related to their differentiated organizational form, and hence they need integrating control mechanisms. This paper studies the EU taxation in view of the above notions common to the literature on fiscal federalism. We find that a strategic management approach can be applied to highlight the problems of taxation i…

Fiscal adjustments and income inequality: a first assessment

2012

Using a statistical approach to identify fiscal adjustments, we find that fiscal consolidation appears to shorten the income gap. Fiscal austerity plans that succeed in bringing public debt to a sustainable path seem to be more likely to reduce inequality. Expansionary fiscal adjustments are particularly important to promote changes in the income distribution.

Fiscal Policy Discretion, Private Spending, and Crisis Episodes

2011

In this paper, we assess the impact of fiscal policy discretion on economic activity in the short and medium-term. Using a panel of 132 countries from 1960 to 2008, we find that fiscal policy discretion provides a net stimulus to the economy in the short-run and crowding-in effects are amplified once crisis episodes are controlled for– in particular, banking crises - giving a great scope for fiscal policy stimulus packages. However, crowding-out effects take over in the long-run – especially, in the case of debt crises -, in line with the concerns about long-term debt sustainability.

Assessing Long-Term Fiscal Developments: A New Approach

2009

We use a new approach to assess long-term fiscal developments. By analyzing the time-varying behaviour of the two components of government spending and revenue - responsiveness and persistence - we are able to infer about the sources of fiscal behaviour. Drawing on quarterly data we estimate recursively these components within a system of government revenue and spending equations using a Three-Stage Least Square method. In this way we track fiscal developments, i.e. possible fiscal deteriorations and/or improvements for eight European Union countries plus the US. Results suggest that positions have not significantly changed for Finland, France, Germany, Spain, the United Kingdom and the US,…

Fiscal visibility in the U.S. and the European Union

2001

The Determinants of the Volatility of Fiscal Policy Discretion

2014

We investigate the determinants of the volatility of fiscal policy discretion. Using a linear dynamic panel dataset model for 104 countries from 1980 to 2006 and a system-GMM estimator,we find that more government instability, less democracy and presidentialist systems increase the volatility of the discretionary component of fiscal policy. Additionally, we show that countries with a larger size, a smaller degree of financial openness, and a stable exchange rate system are more insured against the uncertainty about the conduct of fiscal policy. Our results are robust to various regional dummy variables, diferent sub-sets of countries and the presence of high inflation and crisis episodes.