State enterprise performance and soft budget constraints: The case of Bulgaria

This paper analyses the performance of state enterprises in Bulgaria during 1992-94. Consistent with the literature on other transitional economies, this paper finds that one key factor underlying (the lack of) enterprise adjustment in Bulgaria during this period was the availability of financing. Empirically, the (lack of) past adjustment and the softness of finance are the best predictors of current adjustment. Many state enterprises, mostly smaller ones, appear to have adjusted to the new economic structure, partly in response to tighter budget constraints. However, a number of large, hard-core lossmaking state enterprises did not adjust, due primarily to the soft budget constraints that they faced. These enterprises crowded out profitable enterprises, both public and private, through their large financing requirements, adversely affecting economic growth. Moreover, continued bank financing of these large loss-makers decapitalized the banking system, and budgetary financing of their losses, largely through tax arrears, has undermined fiscal policy. This lack of enterprise adjustment and the resulting financial indiscipline lies at the core of the macroeconomic difficulties that Bulgaria has recently faced.     

Hardened Budget Constraints in Romania: An Approach by CGE Modeling

This study estimates the effects of hardened budget constraints on the Romanian economy and tests a market price-based policy by removing state subsidies. As most subsidies are granted to and through the energy sector, the analysis focuses on energy issues. A general equilibrium approach is used for the empirical application. The results fit the theory and show that removing subsidies contributes to eliminating distortions: energy intensity declines, the Gini coefficient drops and general welfare improves. The main effects of applying a cost recovery policy are the improvement of agents' self-financing capacity and of their investment structure. Surprisingly, production cost falls in all sectors, since cross-subsidies are removed.     

中国国有工业企业劳动力冗员问题研究

科尔奈发展的预算软约束理论提出了一个引人注目的关于国营企业冗员现象的解释。然而这类文献有时忽略这样一种现象,即政府、特别是转型经济中的政府往往会让国有企业(SOES)追求一些非经济目标,并通过补贴和政策性贷款来为此提供资助。通过对大约700家国有企业的研究,我们发现在不减轻企业社会负担的情况下,预算约束的硬化是直接导致九十年代初中国国企冗员上升的主要原因之一。     

1998年中国反衰退措施效果研究

对1998年反衰退措施效果的研究表明:(1)由于政府预算规模过小,地方政府必须保持平衡预算且不能借贷等原因,财政自动稳定器对1999年经济复苏所做出的贡献微不足道;(2)在相机抉择政策方面,1998年的财政政策不具备扩张的特征,难以构成经济复苏的推动力。这一发现对于当前反衰退经济政策的制定和未来财政体制的改革都具有重要意义。     

An Assessment of Fiscal Sustainability in Romania

This article analyses Romanian fiscal policy during the 1990s with the main emphasis on the aspect of sustainability of the budget situation. First, the study presents the general development of Romania's economy during the transition period as background for the subsequent policy analysis. Second, the problems of quasi-fiscal subsidies and payment arrears which led to very large quasi-fiscal deficits are highlighted. In the next step, a macroeconomic model is introduced to assess the degree of fiscal sustainability starting with the inter-temporal government budget constraint. The overall deficit for the general government, including central and local governments as well as other institutions belonging to the non-financial public sector, is computed using official statistics. The research findings suggest that Romania has followed an unsustainable fiscal policy in the transition period, particularly up to 1996. In the first half of the 1990s the government financed the deficit partly through seignorage and tried to deal with immediate pressures, preventing social dissatisfaction but neglecting long-term targets. The situation has improved slightly in recent years, nevertheless, there is still much to be done in this area.     

Optimal fiscal policy, uncertainty, and growth

This paper analyzes the macroeconomic effects of fiscal policy in a stochastic endogenous growth model. Due to externalities in human capital accumulation, the market allocation is inefficient, thereby justifying government intervention. The uncertainty stemming from technological disturbances affects the growth rate, which can be explained by precautionary motives of risk averse agents. Fiscal policy means consist of a consumption tax, investment subsidies, and bonds. We obtain counter-acting growth effects of investment subsidies, which are differentiated with respect to deterministic and stochastic capital income components. The policy implications from the deterministic model are substantially extended in the stochastic context. A general rule for a welfare maximizing policy is derived, which is represented by a continuum of alternative tax-transfer-schemes. We discuss three benchmark cases, which crucially differ with respect to their implications regarding the size of the government expenditure share.     

货币政策、民营企业投资效率与公司期权价值

本文首先考察了货币政策对民营企业融资约束和投资效率的影响。研究发现,宽松的货币政策减少了民营企业的融资约束,但对投资效率的影响则呈现非线性关系。本文进一步从实物期权的角度考察了货币政策对公司增长与清算期权价值的影响,结果表明:高盈利能力公司的增长期权价值在宽松货币政策时期更大,而低盈利能力公司的清算期权价值在紧缩货币政策时期更高。本文的研究结论有助于理解在不同的货币政策状态下,资本逐利这一经济规律的表现形式;同时,本文的经验证据还有助于从投资效率和公司价值的角度评价宏观经济政策对微观经济实体的影响,从而为决策部门制定恰当的经济政策、促进宏观经济体系的良好运转提供政策性建议。     

Housing and credit market shocks: Exploring the role of rule-based Basel III counter-cyclical capital requirements

This paper examines the extent to which the Basel III bank capital regulation attenuates fluctuations in housing and credit markets and fosters financial and macroeconomic stability. We use a positive housing demand shock to mimic a housing market boom and a negative financial shock for credit squeeze and economic meltdown. The results show that the rule-based Basel III counter-cyclical capital requirement effectively attenuates fluctuations in housing and credit markets and prevents bubbles. In the case of a negative financial shock, it significantly reduces the magnitude of economic meltdown. Our analysis of the transition from Basel II to Basel III suggests that it is the counter-cyclical capital buffer that effectively mitigates the pro-cyclicality of its predecessor, while the impact of the conservative buffer is marginal. In contrast to the credit-to-GDP ratio, the optimal policy analysis suggests that the regulatory authority should adjust the capital requirement to changes in credit and output when implementing the counter-cyclical buffer. Future research could extend the study by comparing the effectiveness of the rule-based Basel III with other macroprudential tools in achieving financial and macroeconomic stability.     

DEBT NONNEUTRALITY,POLICY INTERACTIONS,AND MACROECONOMIC STABILITY*

We study the consequences of nonneutrality of government debt for macroeconomic stabilization policy in a sticky‐price model. Ricardian equivalence fails because debt has a negative impact on its rate of return and on private savings, which is induced by assuming transaction services of bonds. Under aggressive monetary policy regimes, macroeconomic fluctuations tend to be stabilized if nominal budget deficits are low. A smooth debt path limits inflation expectations, such that inflation variances can be reduced. Under a balanced budget policy, the central bank's output gap–inflation volatility trade‐off is improved relative to an environment where debt is neutral.     

就业弹性、自然失业和宏观经济政策--为什么经济增长没有带来显性就业?

尽管通常的计算低估了中国的就业弹性 ,但调整后的弹性数值仍属偏低。为什么经济的增长没有带来相应的就业增长呢 ?首先 ,反周期的宏观经济政策对解决自然失业是无能为力的 ;其次 ,在反周期的宏观经济政策所能调节的周期性失业方面 ,由于宏观经济政策所引导的投资方向往往是就业密集度较低的行业 ,进而导致反周期措施拉动就业的能力大为降低。因此 ,完善劳动力市场机制、加强职业培训体系建设、推动高就业产业发展 ,应成为经济政策的重点。     

Foreign Exchange Accumulation and the Entrapment of Chinese Monetary Power: Towards a Balanced Growth Regime?

This article criticises the notion that China's foreign exchange reserves have strengthened its monetary power. While some scholars have argued that China's international monetary influence has been ‘entrapped’ by the domestic interests of its export sector, a one-sided focus on the export sector fails to identify the significant constraints on its macroeconomic autonomy. This article proposes an extension of the concept of entrapment that draws attention to the key role of state-owned enterprises (SOEs) and their domestic fixed-asset investment in its growth regime: China's external monetary dependency – which is understood as both export dependency and the need to maintain foreign exchange accumulation – has been caused by a disparity between fixed-asset investment and private consumption that reflects a redistribution of income from the household sector to the SOE sector. In particular, I expose the SOE sector's rising interests in foreign exchange accumulation by uncovering a mutually reinforcing dynamic between China's external monetary dependence and the financial repression of its banking system. By entrenching an investment-led growth regime that provides key benefits the SOE sector, this dynamic is found to have seriously constrained the macroeconomic policy autonomy of Chinese authorities to rebalance growth away from investments and exports towards private consumption.     

Macroeconomic policy lessons of labor market frictions

The paper explores the consequences of macroeconomic policy for labor market outcomes in the presence of frictions. It shows how policy may be useful in over-riding frictions, as well as how it might generate adverse outcomes. A partial-equilibrium, empirically grounded model is used to simulate policy effects.The key results are that policy has effects on the stochastic behavior of key variables - measures that reduce unemployment also reduce its persistence and increase the volatility of vacancies. Hiring subsidies and unemployment benefits have substantial effects on labor market outcomes, while employment subsidies or wage tax reductions are not very effective policy instruments.     

Non-Keynesian Effects of Government Expenditure on Output in Bulgaria: An HP Filter Approach

A large body of recent studies has explored the presence of non-Keynesian fiscal policy effects in advanced European economies, while relevant empirical sources on post-communist economies are scarce. In the context of the constraints imposed by the SGP, it is crucial for EU New Member States and acceding countries to estimate the macroeconomic impact of discretionary fiscal intervention. This article focuses on the effects of government expenditure on short-term output in the Bulgarian economy a few years prior to EU accession. It finds that government investment affects real growth in a Keynesian fashion while transfers and public consumption exhibit non-Keynesian behaviour. The cyclically adjusted components of the general government budget, computed by HP filter, form the basis of the analysis. The results support the conclusions of relevant studies about advanced European economies.     

宏观调控与实体经济

我国当前的宏观经济面临通货膨胀和经济增长下行的双重压力,两者都会在实体经济上反映出来。针对通货膨胀应该高度关注并采取适度的宏观调控政策,但不能反应过度。现阶段的主要矛盾已经转到经济增长下行问题。宏观经济学的精髓在于均衡,合适的宏观政策应该是在保持经济增长和控制通货膨胀之间找到均衡,选择一个合适的均衡点。我国近期根据宏观经济的走势实施稳健的货币政策和积极的财政政策,意味着将会释放出数量较大的流动性,而这些流动性应该重点流向实体经济。有效的宏观调控必须是以市场化改革所形成的经济体制为基础的。不能因为宏观调控而放慢市场化改革的步伐,尤其要支持实体经济领域民营经济的发展。     

The Macroeconomic Effects of Taxation in a Federal Europe

The signing of the Maastricht Treaty in 1992 has created a dilemma for fiscal policy at both a theoretical and a policy level. The conflict between the increasingly important stabilising role for fiscal policy post-Maastricht and the pursuit of fiscal harmonisation requires a re-examination of the theoretical framework within which policy discussion should take place. Orthodox tax incidence theory cannot adequately analyse the macroeconomic effects of taxation and the paper proposes an alternative post-Keynesian approach based on the tax and business cycle theories of Kalecki. To illustrate the applicability of a Kaleckian approach to taxation in a Federal system, the paper presents a discussion of the macroeconomic effects of State and local taxation in the US. It is also shown to be necessary to study the structure of State government receipts, the expenditure functions of State governments, the State government budget stance and the nature of intergovernmental relations in order to identify macroeconomic effects.     

Environmental Financing in European Economies in Transition

The paper offers a perspective on environmental predicament of economies in transition. Emphasis is put on how these economies finance their environmental needs. It is observed that the demand for environmental financing can be affected both by environmental policy measures (such as internalization of externalities) and by other factors (such as the softness of budget constraints faced by firms). The role of subsidies – in many countries of the Central and Eastern European region provided through special purpose ‘environmental funds’ – is then scrutinized. In particular the question is asked whether such funds crowd out commercial capital from the market. Conditions are discussed that would allow the funds to play their constructive environmental roles without crowding out private financing.     

Contingent wage subsidy

This paper proposes a policy aimed at tackling unemployment that arises from macroeconomic coordination failure. The policy offers firms wage subsidies payable only if the total number of new hires made across the economy is below a prespecified threshold. Subsidies provide incentives for firms to create jobs but the policy's goal is to generate a sufficiently large amount of employment spillovers to set off hiring complementarities taking employment beyond the threshold. Thus, subsidies are not distributed but the policy achieves a Pareto improvement. The market structure is important for policy design. Aggregative game techniques prove useful for the oligopsonistic case.     

The need for an industrial policy in the transition: Questions and challenges

Conclusions The wide set of objectives and the employment of very diversified policy instruments gave to the industrial policy in the transitional economies, a very specific importance and responsibility for establishing a link between the macroeconomic policy and the adjustments at structural level.The policy issues analysed reveal that there is the necessity of a non-rigid and dogmatic approach, adapting the policies and tools to the rapid changes underway. The long-term perspective, in terms of strategies for new growth patterns, has to be modulated with the short-term targets, that have to face the contingent constraints: the role of the industrial policy is also that of establishing a close relation between the two moments, softening the emergence of trade-offs. The constraints, in particular financial, remain substantial and the process of adjustment cannot be without pain.In this framework the main question concerns the capacity of the government in improving its ability to establish the main outlines and to implement them efficiently: a process oflearning by doing has already started and is improving rapidly.     

Fiscal Settings and the Steady State Growth Path*

This paper outlines how deficit-neutral fiscal settings, via their impact on the growth/distribution equation, can play a positive role in minimizing deviant macroeconomic performance. The conventional Solow-Swan model of economic growth assigns no role to the standard instruments of fiscal policy in influencing the equilibrium growth path. In the model presented here, government fiscal policy–in the form of tax and transfer rates–is shown to have real effects on the long-term growth path of the unionized macroeconomy, even when the budget is permanently balanced and policy is fully announced.     

Business cycle in an oligopolistic economy with entry and exit

In this paper we introduce a microfounded macromodel with endogenous market structure, where macroeconomic fluctuations may be determined by firms’ strategic interactions, entry and exit. All the agents have the same preferences but may differ in their budget constraints and change their social status according to idiosyncratic stochastic shocks that trigger entry, while exit is caused by firms’ bankruptcies. Our numerical simulations show that birth and death of firms (associated with entry and exit) can generate macroeconomic fluctuations without technology shocks.