Comparative analyses of fiscal sustainability of the budgetary policy rules

We construct a continuous-time overlapping generations model with an endogenous growth structure and consider fiscal sustainability under two fiscal rules: (i) the government fixes the budget deficit-to-GDP ratio and (ii) the government fixes the primary balance-to-GDP ratio. Under the constant budget deficit-to-GDP rule, fiscal sustainability is ensured when the initial public debt-to-GDP and budget deficit-to-GDP ratios are sufficiently small. Under the constant primary balance-to-GDP rule, it is difficult to ensure fiscal sustainability when the primary balance is in deficit or zero. However, fiscal sustainability is ensured when the primary balance is in surplus and the initial government debt-to-GDP ratio is sufficiently small.     

Fiscal Convergence, Business Cycle Volatility, and Growth

This paper analyzes the effects of fiscal convergence on business cycle volatility and growth. Using a panel of 11 EMU and 21 OECD countries and 40 years of data, we find that countries with similar government budget positions tend to have smoother business cycles. That is, fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systematically associated with smoother business cycles. We also find evidence that reduced business cycle volatility through higher fiscal convergence stimulates growth. Our empirical results are economically and statistically significant, and robust.     

Government size,composition of public spending and economic growth in Brazil

The performance of the fiscal policy is largely affected by the relationship between government size, composition of public spending and economic growth. We use a theoretical framework to find optimal relations among these variables and confront them with a panel data for the Brazilian states. Private capital and government spending are substitute inputs in production as the Brazilian states require provision of public spending to fill gaps in the underdeveloped private sector. Public investment and current government expenditures are combined in fixed ratios in the overall government spending due to strong rigidity of the public budget. The optimal share of public investment is considerably lower than current expenditures, as occurs in developing countries characterized by low economic dynamism. Finally, the average tax burden from the data is below the estimated optimal level, meaning that there is space for increasing tax rate without harming economic growth for some Brazilian states.     

Countercyclical taxes in a monopolistically competitive environment

In the context of a neoclassical growth model with monopolistic competition, this paper studies the stabilizing effects of countercyclical tax policy when the income tax rate has an additional role of financing government budget deficits. Consistent with the conventional wisdom, countercyclical taxes generally reduce aggregate volatility, unless the fiscal response to debt accumulation is weak. The presence of monopoly power enhances these effects. Even when automatic stabilizers successfully stabilize business cycle fluctuations, countercyclical taxes are welfare inferior, due to reduced precautionary saving motives. While, if the fiscal response to debt is weak and countercyclical tax policy destabilizing, the increased precautionary saving motive is not welfare enhancing as the asset accumulated is government debt rather than capital. These results are generally robust. Nominal inertia may, however, dominate the precautionary saving mechanism.     

Fiscal policy and national saving

This paper uses structural vector autoregressions along with structural measures of fiscal policy to measure the dynamic impact of fiscal policy shocks on the output gap and national saving. Positive shocks to government purchases and negative shocks to real net taxes are found to increase the output gap. Positive shocks to the government's structural surplus increases national saving although the effects are small. Positive shocks to government purchases are found to substantially reduce national saving. Negative shocks to real net tax revenues as a share of potential GDP have a small negative impact on national saving.     

地方政府财政支出的结构偏异——基于跨界公共事务的视角*

本文通过理论分析发现,我国地方政府不仅存在生产性支出偏好,还会在外部性和信息不对称等因素影响下,改变其对跨界公共事务的资金投入。在“量入为出”预算编制原则下,本文利用2010—2019年我国31个省级政府面板数据,实证分析了地方政府一般公共预算收入对跨地区民生性支出、跨地区生产性支出、地区民生性支出和地区生产性支出四类财政支出的影响。结果表明：在全国层面上,跨地区生产性支出受财政收入的影响最大,地区民生性支出次之。比较三类地区的结果发现,区域内政府竞争强度越高,地方政府对外部性的重视程度越强,因而当地用于跨界公共事务的资金会越少。从不同类型财政收入对财政支出的影响结果来看,只有间接税收入可以同时对三类地区财政支出产生显著影响。最后根据研究结论,本文提出了相应的政策建议。     

Fiscal strategies,foreign indebtedness,and overlapping generations

Conclusions This paper offers a unifying dynamic system approach to real government debt and real capital formation in a world economy. The sustainability of permanently maintained primary fiscal deficits is investigated in an open economy. In particular if national governments compete in the issuance of debt at an international capital market sustainable debt profiles appear only as a theoretical (i. e., not empirically valid) curiosity. Within the more realistic regime of an undercapitalized world economy a nation can only run a permanently maintained primary surplus. Starting from a PMP surplus the paper also demonstrates the viability of temporary deficits implying an increase in taxation later to stabilize the fiscal debt. By reversing the argument this shows, the right way to reduce government debt in a non-traumatic manner is to run a higher temporary surplus via higher taxation. Using this extrasurplus to buy back fiscal debt the economy may reduce taxation later while enjoying vigorous capital accumulation towards a higher capital-labour ratio. Furthermore, the paper shows that ceteris paribus a relatively high social security load and a relatively high size of a balanced budget causes external indebtedness via consumption oriented current account deficits. It is left for further research to see what happens if government borrows for public investment instead of public consumption.My research was supported by Deutsche Forschungsgemeinschaft. While preparing the paper 1 had access to unpublished work by M. Carlberg and T. Ihori. Discussions with M. Carlberg, H. Großmann, J. Michaelis, and H. Schmid are gratefully acknowledged. The diagrams were mastered by C. Schwarz.     

Accounting for China's Saving‐Investment Imbalance from 2002–2008

This paper decomposes and analyzes China's saving‐investment imbalance (equivalent to current account imbalance) from 2002–2008. We first use the Flow of Funds Accounts to calculate the saving and investment rates (propensity) of the household, corporate and government sectors and to evaluate their relative contribution to the aggregate saving‐investment surplus. The results indicate that the increase of saving‐investment surplus can be attributed to the steady increase of saving by the household and government sectors and the short‐term downsizing of investment by the corporate and government sectors. We then use more disaggregate supplementary datasets to explore the factors behind the evolution of the saving and investment rates for the three sectors. The rise of the household saving rate mainly sources from the urban sector. The corporate saving rate experienced a steady increase because of the rise of profitability. Government macroeconomic policies have had a strong influence on the saving and investment patterns of the corporate and government sectors.     

我国财政政策非线性效应的 实现机制及动态特征研究

本文基于财政调整时期的内生划分方法，采用STR模型对于我国1980-2012年间财政政策非线性效应的实现机制与动态特征进行实证分析，结果发现：一是我国财政政策非线性效应主要是经由消费渠道发生，而且是通过影响消费者预期产生。二是财政政策非凯恩斯效应在不同条件下与财政政策工具之间的搭配组合存在一定差异。其中，当基本预算余额/潜在GDP小于临界值-0045 0时，财政收入对居民消费需求存在非凯恩斯效应；反之，财政支出表现出一定程度的非凯恩斯效应。三是财政政策调整的幅度是居民消费需求非凯恩斯效应产生的重要因素，但财政政策调整的组成成分与政府的初始债务规模不是非凯恩斯效应产生的先决条件。本文研究结论不仅可以为政府制定财政政策提供理论依据与决策参考，还有助于改善我国财政政策实践的操作效率和运行效果。     

Testing for Long Run Purchasing Power Parity: An Examination of Korean Won

My small-scale macroeconomic model of the Taiwanese economy contains behavioral equations to explain saving, investment, the rate of economic growth, export demand, export supply, and import demand. Exploiting the two definitions of the current account (national saving ? omestic investment and export + net factor income from abroad ? imports), the in-sample dynamic simulation tracks the current account remarkably well. If the Taiwanese government pursued deliberate policies to reduce the current account surplus, this model indicates that the effects on the economy would depend critically on whether the current account surplus was eliminated by reducing national saving or by raising domestic investment. [430]     

Public capital,sustainable debt and endogenous growth

We analyze an endogenous growth model with public capital and public debt where we posit that the primary surplus of the government is a positive function of cumulated past debt with an exponentially declining weight put on debt further back in time. We consider two scenarios: first, we study the model assuming that the government runs a balanced budget and, then, we compare the outcome to that of the model with permanent deficits. We analyze growth effects of the two scenarios and we study how fiscal policy of the government affects the dynamics of the model economy. It is demonstrated that the balanced growth rate is higher when cumulated past public debt is smaller. Further, we show that the debt policy of the government crucially determines the dynamics of the model economy and that endogenous growth cycles can arise.     

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.     

PUBLIC DEBT AND PUBLIC INVESTMENT IN AN ENDOGENOUS GROWTH MODEL WITH REAL WAGE RIGIDITIES

We present an endogenous growth model with public capital, public debt and real wage rigidities due to labor market imperfections. Assuming that the primary surplus relative to gross domestic produce (GDP) is a positive function of the debt to GDP ratio, we study growth and employment effects of deficit‐financed public investment using simulations as well as how fiscal policy affects stability of the economy. Further, we contrast the growth rate and the unemployment rate in the deficit scenario with that of the balanced budget scenario. Finally, we compare our results with those obtained in case of flexible wages and full employment.     

Public investment,the rate of return,and optimal fiscal policy in a stochastically growing economy

This study examines the optimal fiscal policy in a stochastic endogenous growth model with private and public capital. The government is willing to actualize a socially optimal equilibrium using a lump-sum tax and government debt linked to public investments, subject to the budget constraint under the golden rule of public finance. A socially optimal fiscal policy states that a deterministic rate of return on government bonds sets the marginal product of public capital. Moreover, public investments optimally adjust the ratio of private capital to public capital to equate the rates of return on such capital. The presence of stochastic disturbances results in a disparity between the optimal marginal products of the two types of capital, as reported in previous empirical studies. This disparity significantly affects the socially optimal growth rate in response to investment risk.     

Stabilization policy,infrastructure investment,and welfare in a small open economy

Using a two-sector neoclassical growth model in an open economy setting with heterogeneous agents, this paper studies the distributional effects and welfare implications of a joint monetary and fiscal policy response to public infrastructure expansion in emerging market economies. The results show that fiscal stabilization policy is critical for achieving fiscal sustainability and price stability. With joint support of monetary and fiscal policy, government infrastructure investment provides significant welfare gains to the economy, and the choice of fiscal instruments has major distributional effects across agents: saving households accrue the highest welfare gains with new bond issuance, while hand-to-mouth consumers are better off when non-distorting taxes are adjusted. These potential tradeoffs in welfare due to households’ differing responses to infrastructure expansion have important implications for policy making.     

Fiscal deficits and growth in developing countries

This paper examines the relation between fiscal deficits and growth for a panel of 45 developing countries. Based on a consistent treatment of the government budget constraint, it finds evidence of a threshold effect at a level of the deficit around 1.5% of GDP. While there appears to be a growth payoff to reducing deficits to this level, this effect disappears or reverses itself for further fiscal contraction. The magnitude of this payoff, but not its general character, necessarily depends on how changes in the deficit are financed (through changes in borrowing or seigniorage) and on how the change in the deficit is accommodated elsewhere in the budget. We also find evidence of interaction effects between deficits and debt stocks, with high debt stocks exacerbating the adverse consequences of high deficits.     

财政支持"三农"政策效应的CGE模拟分析

文章在对CGE模型基本原理进行简要说明的基础上,介绍了一个“八部门财政CGE模型”,并利用该模型对2006年中央财政支持三农政策的效应进行模拟分析。结果表明:(1)中央财政支持“三农”政策在提高农民收入、减缓城乡收入差距扩大方面有着较为明显的效果;(2)农民收入提高间接拉动了消费的增长,对调整投资与消费比例能起到较好的推动作用,并促进整个国民经济的平稳增长;(3)支持“三农”的财政政策并不能从根本上改变城乡居民收入差距扩大的基本格局,最终的出路还是应该在于:加快农村产业结构升级,转移农村剩余劳动力,提高农村劳动生产率。     

The growth impact of discretionary fiscal policy measures

This paper looks at the impact of discretionary fiscal policy on economic growth for a sample of 18 EU countries over the period 1998–2011. The main novelty of this paper is the use, on the revenue side, of a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations, such as changes in cyclically-adjusted variables. Using static and dynamic panel data techniques, we find that fiscal consolidation generally has a negative impact on growth in the short run, although some specific budget categories are not found to be statistically significant. In general, expenditure-based measures are found to have a slightly lower detrimental effect on growth compared to revenue measures, although the difference is not statistically significant. Among expenditure cuts, reductions in government investment and consumption are found to be growth reducing. Among revenues, indirect tax increases are found to have a particularly strong negative impact. Dynamic specifications suggest that consolidation reduces growth mainly in the year of fiscal adjustment, while future growth rates are affected only through the usual time persistence. Non-linear specifications indicate that spreading out consolidation may reduce the negative impact on growth slightly, and there is weak evidence that this is especially the case for revenue-based adjustment.     

财政政策与国际收支:从微观作用机制考察

财政政策影响国际收支存在三个微观机制,即产出-吸收效应,储蓄-投资效应以及汇率效应.这本来是一国当局为实现内部均衡实行扩张性财政政策时,对外部均衡产生的一个被动结果.但同时,从政府的角度而言,一旦掌握了其中的作用机制,当局完全可以运用财政政策在调节国际收支平衡中发挥积极作用.     

财政支出分权如何影响政府支出预算偏离*

政府支出决算与预算的差异可称之为支出预算偏离，其大小直接关系到现代预算制度的建设和积极财政政策提质增效的效果。预算最大化理论指出地方政府追求自由裁量预算的最大化，这会导致预算支出大于决算支出，而财政支出分权则便利了地方政府追求自由裁量预算最大化的条件，因此，财政支出分权是导致支出预算偏离的一个重要因素。利用1994—2017年全省层面和市县加总层面的财政预决算数据，本文发现，财政支出分权程度越高，政府支出预算偏离的程度也越大。不同形式的稳健性检验较好地支持了上述结论。此外，经济发展水平和财政透明度能够降低财政支出分权对预算偏离影响的程度。合理调整不同层级政府之间的事权，建立事权与支出责任相匹配的财政体制，适度加强中央事权和支出责任，将有效降低政府支出预算偏离的程度。