Fiscal and monetary interdependence

Where classical economics integrates the quantity theory of money with the concept of Ricardian equivalence, the tendency of recent macroeconomic presentations is to focus either upon money and inflation or upon taxation and debt. That neglect of classical monetary–fiscal integration is surprising, given an initiative by the International Monetary Fund that set credit, money, and fiscal policy within a single structure. This article places those ‘credit counterparts of broad money’ in the context of the Great Depression and the recent global financial crisis. The upshot is a set of conclusions: that, to counter the prospect of deflation, quantitative easing is a weak policy response; that fiscal deficits are better; and that cuts in taxation are preferable to increased government spending.     

财政分权对城市创新的影响 ——基于地方政府竞争视角

本文利用2003—2016年中国278个城市的面板数据，基于地方政府竞争视角，探讨财政分权对城市创新水平的影响。结果表明：财政分权显著抑制城市创新水平的提升，且经过一系列稳健性检验后该结论依然成立；财政分权对城市创新水平的影响具有异质性，如在科教水平较低、级别较低及中小城市，财政分权显著抑制城市创新，而在科教水平较高、级别较高及大城市却并未抑制城市创新；财政分权通过促进地方政府“为增长而竞争”“为引资而竞争”、抑制地方政府“为创新而竞争”等途径对城市创新水平产生负向影响。研究结论为从政府财政体制改革视角促进城市创新提供启示。     

基于DEA方法的安徽省地方财政科技投入绩效评价

安徽省近年来一直很重视财政科技投入力度,但财政科技投入的逐年增加并没有引导全社会研发投入有相应幅度的增加,这是因为对财政科技投入的效率和产出效果没有专业的评价,导致投入产出效率不高。本文运用数据包络(DEA)方法,通过建立绩效评价指标体系,从横向和纵向两个维度分别对安徽省16个地市和2007-2017年安徽省地方财政科技投入产出进行绩效评价,评价结果显示2007-2017年安徽省地方财政科技投入总体上的投入产出综合效率表现不错,但是分地区的投入效率不够理想。因此建议政府部门优化财政资金管理体系、增加对基础性研究的财政投入、加强对市级财政科技投入的监管等,进一步提高安徽省地方财政科技投入效率。     

Fiscal rules and budget forecast errors of Italian municipalities

We study the impact of the domestic stability pact on the accuracy of budget forecasts of Italian municipalities. Identification of the causal effect exploits a quasi-natural experiment generated by the removal in 2001 of the fiscal restraints on budget decisions for municipalities with fewer than 5000 inhabitants and by stricter budgetary restrictions and severe penalties for noncompliers in 2002. We find that relaxing fiscal rules had a sizeable impact on budget forecast errors, especially in 2002. In fact, revenue (expenditure) forecast errors for municipalities with fewer than 5000 inhabitants became 26% (22%) larger than in the past.     

新发展阶段与建立现代财税体制*

本文基于我国即将进入全面建设社会主义现代化国家新征程的新发展阶段，回顾了党的十八大以来的财税改革经验，锚定“十四五”规划和2035年远景目标，研究了新发展阶段对深化财税体制改革的要求，从深化预算体制改革、理顺央地财政关系、提升现代税收治理、健全债务管理制度、推进财税法治建设五个方面把握中国特色现代财税体制发展，持续为建立现代财税体制提供理论佐证。     

Reducing High Public Debt Ratios: Lessons from UK Experience*

This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate / growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following the Second World War but remained stubbornly high despite large budget surpluses with price deflation after the First World War. Implications for policymakers today are that averting price deflation is a high priority and that supply‐side policies that raise growth could play an important part in debt reduction.     

Jean Tirole,Nobel Prize Winner

The Royal Swedish Academy of Sciences awarded the Nobel Prize in Economic Sciences for 2014 to Jean Tirole, Toulouse School of Economics (TSE), Toulouse, France ‘for his analysis of market power and regulation’. What commonly characterizes Jean Tirole's work is a combination of rigorous scientific analysis of markets and provision of useful scientific insights and policy guidance for regulation and competition policy in such markets. This paper focuses on two of Tirole's papers, both co-written with Jean-Charles Rochet, which probably best exemplify his policy-oriented research. It summarizes and then explains how the theory that these papers develop led to the implementation of a new policy regulating the payment card industry in the European Union.     

Revising the European Central Bank’s fiscal rules to support growth and employment

Abstract

The paper presents a reform proposal for the operations of the European Central Bank (ECB) whose purpose is to create a common set of risk-free assets for financial institutions operating in the euro area (EA), which is the necessary condition for having a single internal financial market. The proposal does not require the introduction of changes in the existing European Union treaties. The effects of this reform on the debt dynamic of EA member countries permit a revision of the existing fiscal rules. With the help of some simulations, it is shown that maintaining compliance with the European treaties, the reform of the ECB operations and revised fiscal rules would transform the current fiscal deflationary stance into a reflationary one. Some implications for aggregate demand and growth for the EA are briefly discussed.     

Cost-sharing in directed networks: Experimental study of equilibrium choice and system dynamics

This study reports the results of an experiment on directed networks with positive externalities induced by cost-sharing. Subjects participated in a network game in which they had to choose between private and public transportations. If a player chose public transportation, then she shared the travel cost equally with other players making the same choice, whereas if she chose private transportation, then her travel cost was fixed. Travel costs on the private route were manipulated across the two experimental conditions. In one condition, these costs were homogeneous among players; in the other condition, they were heterogeneous among players and only privately known. We found that half (none) of the player groups in the homogeneous (heterogeneous) condition converged toward the efficient equilibrium. Examination of the system dynamics shows that convergence toward efficiency was facilitated by: (1) the existence of an intermediate equilibrium choice; and (2) strategic teaching by which a farsighted player chooses strategies with poor short-term payoff in order to shift group decisions to the efficient equilibrium and thereby increase her own long-term benefit.     

Wilhelm Röpke and Richard C. Koo On Secondary Deflations and Balance Sheet Recessions

The concept of a ‘secondary deflation’ was developed in the 1930s by the German economist Wilhelm Röpke, who saw it as something different from a normal depression. While a primary deflation is a necessary reaction to the inflation from a boom period, a secondary deflation is independent and economically purposeless. Röpke argued that secondary depressions occurred in the US, Germany, France and Switzerland during the 1930s, but was vague on what made them follow primary depressions. Recently, the Taiwanese–American economist Richard C. Koo has claimed to have discovered the ‘Holy Grail of macroeconomics’, that is, what made the Great Depression so deep and long. During the Great Depression, the bursting of the asset price bubble resulted in private sectors having more debt than assets; as they shifted from maximising profits to minimising debt, the consequent debt deflation shrank the economy. According to Koo, Western economies today are suffering from a similar ‘balance sheet recession’. Strengthened by the notion of a balance sheet recession, Röpke's long‐lost insights might advance our understanding of the business cycle in general and the present crisis in the US and the Eurozone in particular.