Does fiscal sustainability matter only when there is a fiscal house on fire, as was the case with the Greek sovereign insolvency in 2011–12? Far from it.
Why fiscal sustainability matters
Willem Buiter, 10 January 2014
Topics: Financial markets, Global crisis, International finance, Macroeconomic policy
Tags: balance-sheet recession, banking, banking union, banks, capital flows, credit booms, Currency wars, emerging markets, eurozone, Eurozone crisis, financial crisis, fiscal policy, fiscal sustainability, global financial crisis, sovereign debt, sovereign debt restructuring
Catenarian fiscal discipline
Hans Gersbach, 4 January 2014
Limiting the accumulation of public debt in democracies has always been a problem, but it has become a particularly pressing one in the last few decades.
Tax policy in (and for) hard times
Michael Keen, 16 October 2013
Tax policy, like everything else, has been through tough times since the onset of the crisis. First, tax policy was to stimulate the economy (Heady 2011). Now it is to help consolidate the fiscal position – always with considerable urgency and all in the midst of public anger and disquiet.
Carlos A. Vegh , Guillermo Vuletin, 1 October 2013
It is well-established that government spending in developing countries has often been procyclical. In other words, government spending has increased in good times and contracted in bad times, thus exacerbating the underlying business cycle. The inability to save in good times to build a war chest for bad times has often led to wrenching financial and sovereign-debt crises.
When is the time for austerity?
Alan Taylor, 20 July 2013
In 1809, on a battlefield in Portugal, the first recognisable medical trial evaluated bloodletting on a sample of 366 soldiers allocated into treatment and control groups. The cure was shown to be bogus. It was the beginning of the end of pre-modern medicine.
Spillovers: Why macro-fiscal policy should be coordinated in economic unions
Gerald A. Carlino, Robert P Inman, 24 June 2013
The recent Great Recession in the US and Europe has generated renewed interest in the management of macro-stabilisation fiscal policy in economic unions. The received wisdom among economists is that such fiscal policies can only be managed efficiently by an overarching central government. Oates, in his classic treatise on fiscal federalism, concludes:
Self-defeating austerity shocks
Reda Cherif, Fuad Hasanov, 3 May 2013
In many advanced countries, in the wake of the 2008 global financial crisis, deficits skyrocketed and public debt ballooned (see Figure 1). In fact, fiscal stimulus accounted for only a small fraction of the increase in debt, whereas collapsing revenues and higher unemployment and social benefits contributed the largest share (IMF 2011).
Why do emerging markets liberalise capital-outflow controls? Fiscal versus net capital flow concerns
Joshua Aizenman, Gurnain Kaur Pasricha, 2 May 2013
Recent years have seen a re-emergence on the capital controls policy debate:
Should the role of preparing budgetary projections be delegated to an independent agency?
Rossana Merola, Javier J. Pérez, 1 May 2013
The debate about fiscal forecasts has recently been growing more intense in Europe. At its root, there is the evidence of planned government deficits significantly exceeding recurrent budgetary plans in recent years. This comes at a time of high public deficit and debt levels for EU member states.
Budget balance, structural unemployment and fiscal adjustments: The Spanish case
Javier Andrés, Rafael Doménech, 5 April 2013
One of the most important questions in the current process of fiscal consolidation in many developed economies concerns the size and the pace of the adjustment. An excessive and/or too-fast fiscal retrenchment can have dramatic effects on unemployment and growth, while if it is too slow, it can prove to be ineffective and lack credibility in the eyes of the financial markets.
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