Output effects of fiscal consolidations

Carlo Favero, Francesco Giavazzi, 7 September 2012

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The austerity debate turns on a central economic logic – how does fiscal policy affect output? This is a tricky question since declining output can affect fiscal policy just as much as fiscal policy can affect growth. Governments, after all, don’t make policy in a vacuum.

Topics: Global crisis, Macroeconomic policy
Tags: austerity, fiscal crises, fiscal policy

Fiscal consolidation and reforms: Substitutes, not complements

Coen Teulings, 13 September 2012

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Many OECD countries suffer from high sovereign debts. Sooner or later, this problem must be addressed. That will require some form of fiscal retrenchment.

Topics: Macroeconomic policy, Taxation
Tags: austerity, fiscal crises, Fiscal retrenchment, Institutional reform

Rethinking austerity: Introducing a new Vox eCollection

Giancarlo Corsetti, 23 June 2012

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Even as the first Vox eCollection is going online, the global economy is being shaken by events ranging from a Chinese economic slowdown to the possibility of a delayed Greek Eurozone exit.

Topics: Macroeconomic policy
Tags: austerity, fiscal crises

A tale of two overhangs: The nexus of financial sector and sovereign credit risks

Viral Acharya, Philipp Schnabl, Itamar Drechsler, 15 April 2012

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From 2007 to 2010, the Irish public debt-to-GDP ratio rose roughly 20% annually, taking it from among the lowest among OECD countries in 2007 (25%) to among the highest in 2010 (96%).

Topics: Global crisis, International finance
Tags: Bailouts, Eurozone crisis, fiscal crises, sovereign debt

What can Europe learn from Sweden? Four lessons for fiscal discipline

Lars Calmfors, 12 March 2012

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Several Eurozone countries are currently struggling with acute fiscal crises (eg Corsetti and Müller 2012). At the same time, the new fiscal compact is an attempt to beef up fiscal frameworks for the future.

Topics: Macroeconomic policy
Tags: fiscal crises, fiscal policy, Sweden

The ECB’s trillion euro bet

Charles Wyplosz, 13 February 2012

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With immense modesty, the President of the ECB Mario Draghi is giving the credit for falling spreads on Eurozone government debt to the courageous reforms announced in a number of countries, especially those where former academic economists act as prime ministers. Oh, how we would love to buy Mario Draghi’s interpretation!

Topics: EU policies, Europe's nations and regions
Tags: ECB, Eurozone crisis, fiscal crises

The unexplained part of public debt

Camila FS Campos, Dany Jaimovich, Ugo Panizza, 17 January 2012

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The answer to the question “How do countries get into debt?” seems trivial. The stock of debt is equal to the sum of past budget deficits. Countries accumulate debt whenever they run a budget deficit and reduce their debt when they run a budget surplus.

Topics: Macroeconomic policy
Tags: fiscal crises, sovereign debt

The global saving glut will hold bond yields down

Heleen Mees, 8 August 2011

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The saving glut theory has gone out of fashion – unjustly so. In spite of twin financial crises looming on either side of the Atlantic, US Treasury and German Bund yields have declined in recent weeks. This can be explained by not only the dismal economic growth of the US economy in the first semester of 2011, but also the unrelenting build-up in total debt securities outstanding.

Topics: Global crisis
Tags: China, Eurozone crisis, fiscal crises, global crisis, global imbalances, US

Is Greece different? Adjustment difficulties in southern Europe

Daniel Gros, Cinzia Alcidi, 22 April 2010

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The Southern members of the Eurozone are often lumped together because they all have overvalued currencies and twin deficits – fiscal and external current account (De Grauwe 2010).

Topics: Europe's nations and regions
Tags: Eurozone crisis, fiscal crises, Southern Europe

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