This paper studies the experiences with fiscal adjustments in the European Union (EU) countries during the transition period to the Economic and Monetary Union (EMU). Using several approaches suggested in the literature on fiscal adjustments and their macroeconomic effects and in the literature on EMU, we analyze the effects of the fiscal adjustments during this period on private consumption. T...

This paper analyses fiscal autonomy in Germany. First, it provides an overview of fiscal autonomy. What is novel in this paper compared to previous studies is the development of a fiscal autonomy coefficient for the states, based on communal data. The basic intention in the empirical part is to analyse how fiscal autonomy affects the tax morale, defined as the intrinsic motivation to pay taxes,...

BACKGROUND Publicly funded healthcare forms an intricate part of government spending in most Organisation for Economic Co-operation and Development (OECD) countries, because of its reliance on entitlements and dedicated revenue streams. The impact of budgetary rules and procedures on publicly funded health care might thus be different from other spending categories. In this study we focus on th...

The fiscal condition of most OECD countries has deteriorated markedly in the last 30 years. But beyond this general weakening, there has been considerable variation in the fiscal performance of these countries. For example, Italy, Belgium, Japan and Ireland accumulated significant amounts of public debt whereas Finland, Norway, the UK and, until recently, Germany, implemented relatively conserv...

Using a flexible semiparametric varying coefficient model specification, this paper examines the role of fiscal policy on the U.S. asset markets (stocks, corporate and treasury bonds). We consider two possible roles of fiscal deficits (or surpluses): as a separate direct information variable and as a (indirect) conditioning information variable indicating binding constraints on monetary policy ...

This paper investigates the effects of fiscal policy on the trade balance using a structural factor model. A fiscal policy shock worsens the trade balance and produces an appreciation of the domestic currency but the effects are quantitatively small. The findings match the theoretical predictions of the standard Mundell-Fleming model, although fiscal policy should not be considered one of the m...

THE ``DECADE of development’’ cannot rest on an unstable fiscal base. India has seen too often how bold objectives can be pushed aside through financial crisis. It is extremely important to bring down fiscal deficits mainly through budget cuts and privatisation revenues to reduce the ratio of public debt to national income to avoid future macroeconomic destabilisation. Unless substantial fiscal...

In this paper we analyze the implications of demographic shift for an economy’s fiscal sustainability through lens of fiscal space. We formulate a stochastic dynamic general equilibrium, overlapping generations model to measure fiscal space in terms of budgetary room between the current and maximum tax revenues (the peaks of Laffer curves). We calibrate the model to Japan and US data and conduc...

This contribution develops a blueprint for a European fiscal union. We argue that a viable European fiscal union can be constructed without joint liability for public debt or a centralized government with a large common budget. Such a fiscal union should combine elements of market discipline with stabilisation in case of asymmetric shocks. Our proposal addresses the shortcomings of most other r...