Stories,Fables, Parables,and Myths: Greece and the Euro Crisis,Toward a New Narrative

The debt crisis in the Eurozone has generated an intense academic debate about the appropriate policy response to the crisis. At the same time, the general public hears a variety of stories about the crisis, and especially stories about the debt crisis in Greece. This paper deals with the economic significance of stories, in particular with the importance of the Greek "morality tale." Stories are powerful in influencing public psychology, and they can affect the economy through fluctuations in confidence and "animal spirits." The paper considers the development of the Greek story through a web of related stories, fables, parables, and myths. It argues that the story dramatically distorts the reality of the debt crisis in the Eurozone and poses a threat to the global economy through its adverse effects on confidence and "animal spirits." It concludes that Europe needs not only a new policy direction, but also a new narrative about the debt crisis.     

Fiscal space on the eurozone periphery and the use of the (partially) balanced-budget multiplier: The case of Spain

This article adopts the “functional finance” approach to consider the utilization of expansive fiscal policies in the members of the European Monetary Union most affected by high unemployment. As they do not have their own monetary policy, fiscal deficits require the issuing of public debt without the support of the central bank. The authors consequently incorporate the notion of a (partially) balanced-budget expansion to achieve the desired stimulus in gross domestic product (GDP) with the least possible effect on public debt. Their proposal is only a sort of “imperfect” balanced-budget expansion: It is based on the idea that simultaneous increases in public revenue and expenditure can boost GDP, but without any pretension of keeping public deficit unchanged. Specifically, the authors use the case of Spain to show that a more expansive fiscal policy is desirable on economic grounds, and that only institutional constraints prevent it. They do it presenting two alternative scenarios for the coming years and analyzing their different impact on unemployment and fiscal sustainability. The first represents a firm commitment to budget consolidation, whereas the second is based on this “imperfect” application of the balanced budget multiplier. The main conclusion is that a more expansive fiscal policy is perfectly compatible with finance sustainability.     

税收、政府支出与消费变动的关系——基于省际面板数据的实证分析

基于霍尔不确定条件下的消费理论,建立了一个分析消费决策的模型,并利用我国1992-2008年的省际面板数据进行实证分析。结果显示,减税与扩大政府支出都对消费有正向影响;投资收益的增加则会减少消费。在经济衰退时,减税和增加财政支出是提高消费、扩大内需的有效手段。在当前经济脆弱时期,采取积极的财政政策,扩大在民生领域的财政支出,是带动当前经济增长和奠定未来发展基础的最佳政策选择。     

A multiregional model of China and its application

China's rapid economic transformation since 1979 has been accompanied by a stark regional disparity with the coastal provinces integrating swiftly into the world markets while inland regions lagging far behind in the industrialisation process. The growth imbalance has placed China's provinces into different stages of development and called for different policy responses to deal with different challenges they are facing. Similarly, a national policy initiated by the central government is likely to be interpreted and implemented in different ways when local governments take into consideration the different conditions in their localities. Therefore, it would be extremely valuable for policy makers and researchers to have an analytical tool that is capable of studying interactions among the provincial economies and the dynamic relationship between the centre and local governments. The multiregional econometric model of China presented in this paper is the first attempt to provide such a tool. The pioneering model consists of over 1200 equations, covering 30 provinces of China that are linked by inter-regional flows of goods and services. The model is used to study the impact of fiscal recentralisation in the 1990s. The counterfactual simulation results show that when China's central government diverted tax revenue from provincial governments, it achieved higher budgetary revenue for the central government but at the expense of lower overall budgetary revenue and slower economic growth.     

汇率波动与FDI区位分布——基于辖区间财政竞争视角的研究

为了获取相对的竞争优势,辖区政府会通过策略性财政政策影响砌的区位分布.文章利用中国省级面板数据,实证分析人民币汇率波动通过改变辖区政府的财政竞争策略,从而影响FI)I区位分布的实际效应.研究表明,人民币汇率升值会弱化FDI流入量与辖区政府财政支出竞争程度两者的正向关系,此时依靠财政支出结构偏向基本建设的竞争策略将收效甚微.     

When and why do countries break their national fiscal rules?

This paper identifies determinants of compliance with various types of national numerical fiscal rules. Based on 51 fiscal rules in force in EU member states from 1995 to 2015, the analysis identifies determinants among specific rule characteristics and their fiscal frameworks, as well as their political, (socio-)economic and supranational environments. While the average compliance across all rules and countries is around 50%, compliance with rules constraining stock (rather than flow) variables, set out in coalitional agreements, as well as rules covering larger parts of general government finances is significantly higher. Furthermore, independent monitoring and enforcement bodies (issuing real-time alerts) turn out to be significantly associated with a higher probability of compliance. Several theories of the deficit bias of governments due to government fragmentation, decentralization and political budget cycles are also significant with regards to compliance with fiscal rules. However, neither the economic environment or business cycle, nor forecast errors (except for an unexpectedly higher primary balance) on average seem to play a significant role.