Do expectations matter? Reassessing the effects of government spending on key macroeconomic variables in Germany

This article contributes to the debate on how to properly identify exogenous fiscal shocks in the data. We include expectations held by consumers and firms into the standard vector autoregression (VAR) framework based on information from historical issues of the German political magazine Der Spiegel. The findings underscore the need to account for expectations, as failing to do so leads to significant misinterpretation of the effects of government spending. When neglecting anticipation effects, our results support the recent findings for Germany by pointing to a rather positive effect of government spending on GDP. However, inclusion of expectations yields a change in this effect, suggesting that government spending is much less beneficial for GDP, as it crowds out private consumption and investment.     

财政分权与经济增长

对H.Davoodi,D.Xie,and H.Zou的两篇文章中的内生增长模型进行了改进;把地方财政决算支出占国家决算支出的比重看作衡量财政分权的指标,并利用1986-2004年间的数据对财政分权对我国经济增长的作用进行了两组回归分析。发现在1986-1990年间我国的财政分权的比重过高阻碍了我国的经济增长;在1991-2004年间我国的财政分权程度与我国的最大化经济增长相符。最后,对得出的统计结论进行了充分的解释。     

Tax multipliers and monetary policy: Evidence from a threshold model

Romer and Romer (2010) use the narrative record to generate a time series of exogenous shocks to fiscal policy. They report a tax multiplier of 3.0. We extend their analysis and allow for nonlinearities between their shocks and the effects on output by estimating a threshold regression model. Using Hansen’s (1997) procedure, we find the best fitting threshold is changes in the federal fund rate with a delay of two quarters. Moreover, we find that the tax multiplier is approximately 4.3 if accompanied by an accommodative monetary policy and approximately 1.2 under tight monetary policy.     

Government spending multipliers in contraction and expansion

This paper investigates the impact of government spending on output and the size of the spending multiplier during periods of output contraction and expansion. It also investigates the impact of spending when the economy hits the nominal zero lower bound. It uses a panel of 21 advanced countries over the period of 1979–2011, applying a TSLS estimation technique. We find a spending multiplier of close to 1 during expansion and values of up to 3 during contractions. However, our results do not indicate a difference in the impact of spending during nominal zero lower bound periods.     

Conjectural variations, symmetric equilibria and economic policy

In this paper, we consider conjectural variations in a simple static general equilibrium model under oligopolistic competition. The modeling of conjectures captures the role played by beliefs in a micro-founded model. So, the economy may have three kinds of symmetric general equilibria. Furthermore, these equilibria can be Pareto-ranked by the conjectural variation parameter. Finally, we consider the implementation of a tax on the strategic behaviors in case of balanced-budget rule. The comparative statics illustrates the idea according to which the effectiveness of the multiplier mechanism to mitigate the market distortions depends on the symmetric equilibrium considered. Therefore, the effect of the tax on the prices and economic activity depends on the degree of market power which is conjectured by the agents.     

The Effects of Fiscal Consolidation and Welfare Composition of Spending on Electoral Outcomes: Evidence from US Gubernatorial Elections between 1978 and 2006

This study attempts to make a contribution to the field of spending aspects of fiscal policy and their impacts on electoral outcome. Due to varying degrees of financial responsibilities and commitments to provide public goods and services, US state governments serve as a perfectly natural laboratory to test the electoral significance of fiscal policies. We adopt a probit model, with several specifications, to determine significant impacts of fiscal consolidation and increases in welfare spending on US gubernatorial elections from 1978 to 2006. The analyses show that voters are more concerned about the increase in debt than current budget deficits. An increase in welfare spending is negatively associated with reelection. Moreover, the impact of taxation on gubernatorial elections turns out to be insignificant. In particular, findings suggest that the political business cycle model does not hold true in US gubernatorial elections. Expansionary fiscal policy right before the election may not have crucial impacts on the chances of an incumbent winning the election.     

Effects of government spending shocks in China,Japan, and Korea

ABSTRACT

This study investigates the effects of government spending shocks on various key macro variables in China, Korea, and Japan using structural VAR models. The main empirical findings are as follows. Government spending multipliers of all three countries are far larger than 1 in recent years. The effectiveness of fiscal expansion has not changed markedly in China but substantially increased in Korea (after the Asian financial crisis) and Japan (during zero lower bound period). Increases in the effectiveness of fiscal expansion are associated with changes in the monetary and exchange rate policy regimes and institutions of these countries. Among the three countries, the government spending multiplier is relatively large in China but relatively small in Japan in recent years. Although the effects on exchange rate and trade balance vary across countries and sample periods, real exchange rate tends to depreciate, whereas trade balance tends to improve under flexible exchange rate regimes. Some empirical findings are consistent with standard theory, but others are not.

Abbreviations: NK: New Keynesian VAR: Vector Autoregressive ZLB: Zero Lower Bound     

What happens to social spending in IMF-supported programmes?

This article finds that education and health spending has risen during International Monetary Fund (IMF)-supported programmes at a faster pace than in developing countries as a whole. The analysis is based on the most comprehensive dataset assembled thus far for this purpose, with data covering 1985 to 2009 for 140 countries. Controlling for other determinants of education and health spending, including macroeconomic conditions, the results confirm that IMF-supported programmes have a positive and significant effect on social spending in low-income countries. Over a 5-year period with IMF-supported programmes, spending for education increases by about ¾ percentage point of Gross Domestic Product (GDP); and for health, by about 1 percentage point of GDP. IMF-supported programmes are also associated with increases in the share of government spending allocated to education and health.     

地方财政政策逆周期调节：财政分权还是债务增发*

财政政策工具实际操作偏离最初设计将会降低政策工具的调控效果,导致宏观经济波动加剧。针对地方政府财政政策的逆周期性调控目标,本文关注财政分权深化和政府债务增发的逆周期性效应。研究发现：地方政府财政政策总体呈现顺周期特征。财政分权程度的提高放大了地方财政政策的顺周期性。地方政府债务增发使地方财政政策呈现逆周期特征。地方政府财政政策及其收入面、支出面均呈现顺周期性,由“顺”转“逆”的债务平衡点分别为0137,0113,0209。当前绝大部分地区的债务规模都在债务平衡点之下。驱动地方政府债务逆周期调控的内在因素是官员晋升激励。晋升激励的程度越高,地方债务逆周期调控的力度就越大。但外部市场融资环境的波动削弱了地方政府债务逆周期调控的力度。本文的政策主张是,不宜过度财政分权,应该扩大地方债发行规模,促使地方财政政策逆周期调节。     

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.     

我国宏观税负的经济影响分析

一国的税收收入来源于经济,宏观税负与经济增长之间存在相互作用,而且这种相互作用不仅是当期的,更有长期的相互影响。因此,在对宏观税负的经济影响研究中,本文运用SVAR模型结合政府支出研究我国宏观税负与经济增长之间的动态关系,即宏观税负的经济增长效应,并使用脉冲响应函数和方差分解这两个工具,对变量之间的传递效应进行数量分析。文章随后还构建了四个SVAR模型,深入分析宏观税负的经济增长作用机制。研究发现,宏观税负通过投资、消费、进口和出口影响经济增长,其中降低宏观税负的刺激作用只有对投资才是长期有效的,宏观税负对消费、进口和出口的影响仅仅是短期显著。而且相比于增加政府支出对经济增长的正效应,降低宏观税负的效果短期不显著且长期不持续。