scholarly journals Fiscal Policy Sustainability, Economic Cycle and Financial Crises: The Case of the GIPS

2012 ◽  
Author(s):  
Gabriella Deborah Legrenzi ◽  
Costas Milas
Keyword(s):  
Fiscal Policy ◽  
Financial Crises ◽  
Economic Cycle ◽  
Fiscal Policy Sustainability

Fiscal Policy in the Longer Term

2011 ◽  
Vol 217 ◽  
pp. F4-F10
Author(s):  
Ray Barrell
Keyword(s):  
Fiscal Policy ◽  
Economic Activity ◽  
Financial Crises ◽  
Economic Distress ◽  
Short Run ◽  
Use Tax ◽  
The Uk ◽  
Over Time

Governments are important players in many parts of the economy, and at present perhaps the most visible is the balance they set between taxing and spending. Tax and spending polices are in part designed to redistribute resources between individuals, but they can also be used to redistribute resources over time. Governments can also use tax and spending policies to sustain or restrain economic activity, and in most countries a case can be made for using active fiscal policy in periods of clear economic distress, or in periods when it would be useful to restrain imbalances that can lead to financial crises. As a result it is difficult to gauge the appropriate stance of policy. Short-run problems have to be balanced against longer-term needs, and mistakes are common. In the UK, for instance, in the six years up until 2008 the balance of policy was perhaps too loose, whilst over the next five years it is probably too tight, even though deficits are projected to be higher than they were before 2009.

The fiscal policy and the dynamic of the economic cycle

2020 ◽  
Vol 47 (2) ◽  
pp. 231-241
Author(s):  
Huthaifa Alqaralleh
Keyword(s):  
Fiscal Policy ◽  
Threshold Value ◽  
Policy Framework ◽  
Economic Cycle ◽  
Content Type ◽  
Unobserved Component ◽  
Cyclical Fluctuations ◽  
Policy Shocks ◽  
The Business Cycle ◽  
Unobserved Component Model

PurposeThis study seeks to determine in some detail whether the state of the economic cycle matters in considering the effects of fiscal policy shocks on output.Design/methodology/approachThis issue leads us to two primary objectives: to define the economic cycle measuring the gap with the unobserved component model with a smoother trend, which can be used efficiently to generate gap measures for use in real-time decision-making and avoids the criticisms of measures based on contentious structural models; and to look empirically at the fiscal policy stance over the phases of the cycle, bearing in mind the short time variation and smooth change between the cycle regimes.FindingsThis paper provides evidence that the fiscal policy rule seems to operate with varied coefficients depending on whether the transition variable is below or above the estimated threshold value.Originality/valueThe asymmetric response gives policymakers the impetus to reconsider the fiscal policy framework because of specific circumstances, such as shocks that can dramatically affect the nominal features of the business cycle. Put differently, stable and moderate fiscal policies would at least not contribute to cyclical fluctuations, and therefore would be better than what we have typically experienced. There would, therefore, seem to be a distinct need to address the properties of economic cycles under different fiscal policy rules.

scholarly journals O Impacto da Política Fiscal nos Spreads dos Países Emergentes

2012 ◽  
Vol 10 (1) ◽  
pp. 31
Author(s):  
Katia Rocha ◽  
Ajax Moreira
Keyword(s):  
Fiscal Policy ◽  
Interest Rates ◽  
Emerging Market ◽  
External Shocks ◽  
Sovereign Spreads ◽  
Relevant Role ◽  
Fiscal Austerity ◽  
The Impact ◽  
Fiscal Policy Sustainability ◽  
Budget Surplus

Country risk or sovereign spreads affect directly the investment of companies and sovereigns, being an important figure to domestic interest rates and to economic growth. This paper analyzes the impact of fiscal policy on the determinants of the sovereign risk of 23 emerging market countries between 1995-2008. The results associate lower spreads to fiscal austerity, i.e. an accumulation of primary budget surplus that keeps the debt to GDP ratio constant over time. An increase of 1% on primary budget surplus decreases the spreads around 50 basis point. It evidences that fiscal policy sustainability plays a relevant role in determining the sovereign spreads besides contributing as a policy that mitigates external shocks.

scholarly journals Fiscal Policy and Growth: Do Financial Crises Make a Difference?

2010 ◽  
Author(s):  
António Afonso ◽  
Hans Peter Gruener ◽  
Christina Elisabeth Kolerus
Keyword(s):  
Fiscal Policy ◽  
Financial Crises

The Uncertainty of Government Debt Projections

2006 ◽  
Vol 195 ◽  
pp. 58-59 ◽  
Author(s):  
Ian Hurst ◽  
Rebecca Riley
Keyword(s):  
Public Sector ◽  
Fiscal Policy ◽  
Golden Rule ◽  
Government Debt ◽  
Economic Cycle ◽  
The Public ◽  
Sustainable Investment ◽  
The Uk ◽  
A Share

Since 1998, fiscal policy in the UK has been guided by two rules: the golden rule to borrow over the economic cycle only to invest, such that the average annual surplus on the public sector current budget as a share of GDP is greater or equal to zero; and the sustainable investment rule that public sector net debt should not exceed 40 per cent of GDP over the economic cycle.

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