It is widely believed that fiscal transparency has large and positive effects on fiscal performance. According to the IMF, “transparency in government operations is widely regarded as an important precondition for macroeconomic fiscal sustainability, good governance, and overall fiscal rectitude” (Kopits & Craig (1998, p. 1)). Indeed, both the IMF and the OECD are currently developing Codes of ...

There has been a resurgence of interest, in many parts of the world, in problems of multi-level government finance. Recent and ongoing political and economic developments raise questions about the role of the nation, subnational governments, and supranational public authorities in the provision and financing of public-sector programs. This paper presents a selective survey of some of these deve...

Control on regional government budgets is important in a monetary union as lower tiers of government have fewer incentives to consolidate debt. According to the Fiscal Theory of the Price Level; unsustainable non-Ricardian fiscal policies eventually force monetary policy to adjust. Hence, uncoordinated and non-regulated regional fiscal policies would therefore threaten price stability for the m...

The monetary instrument problem is examined in an endowment economy model with various stochastic disturbances, with minimizing the variance of inflation as the policy objective. Following current developments in the theory of fiscal determination of the price level, for different monetary policies, active or passive fiscal policy is specified to guarantee a unique equilibrium. The responses of...

Fiscal policy restrictions are often criticized for limiting the ability of governments to react to business cycle fluctuations. Therefore, the adoption of quantitative restrictions is viewed as inevitably leading to increased macroeconomic volatility. In this paper we use data from 48 U.S. states to investigate how budget rules affect fiscal policy outcomes. Our key findings are that (1) stric...

We examine the impact of different degrees of fiscal feedback on debt in an economy with nominal rigidities where monetary policy is optimal. We look at the extent to which different degrees of fiscal feedback enhances or detracts from the ability of the monetary authorities to stabilise output and inflation. Using an objective function derived from utility, we find the optimal level of fiscal ...

Imperfectly competitive macroeconomic models typically assume a symmetric equilibrium with identical firms, despite the fact that most industries are characterised by substantial degrees of firm heterogeneity. We examine how inter-firm efficiency gaps affect fiscal policy effectiveness under monopolistic competition.  2000 Elsevier Science S.A. All rights reserved.

Since the proof of Theorem 1 is rather cumbersome, it is useful to break it into several lemmas.