Fiscal Policy in Real Time*

In this paper, I estimate the ex ante or intentional cyclical stance of fiscal policy in OECD countries. I use the fiscal plans reported at the time of budgeting, together with other information available to fiscal policy‐makers in real time. Indeed, fiscal plans might be significantly different from ex post outcomes because governments do not have complete control over their implementation, which is influenced by several exogenous factors. When fiscal‐policy rules are estimated using real‐time data, I show in this paper that OECD countries have often planned a counter‐cyclical fiscal stance, especially during economic expansions. This contrasts with conventional findings based on actual data, which tend to point towards a‐cyclicality or pro‐cyclicality. Forecast errors for the government structural balance and the output gap play a central role in explaining the differences between estimates based on ex ante and ex post data.     

The Role of State Fiscal Policy in State Economic Growth

Do state policy makers have the ability to affect a state's rate of economic growth? This article examines one possible source of growth and per capita output level disparities by studying the role that state taxation and public expenditure decisions play in fostering economic development. Using pooled annual U.S. state‐level data from 1972 to 1998, a fixed‐effects model is employed to examine the effects of changing tax rates on both state per capita output levels and growth rates. The results indicate that higher tax rates negatively influence short‐run state economic growth, which lowers state output levels. However, long‐run growth is unaffected by changes in state tax rates, even after adjusting for the effects of initial per capita output levels, state expenditures, and aid from the federal government. Nor do changes in state public spending rates and federal aid permanently alter state growth rates, implying that state fiscal policies have only transitory effects on state growth. (JEL H71, O40, R11)     

Fiscal Policy,Expectations, and Exchange-Rate Dynamics*

This paper uses the sticky-price monetary model to analyze the effects of fiscal policy on the exchange rate under alternative assumptions about exchange-rate expectations. the use of different expectations mechanisms-specifically the perfect-foresight model and the popular models tested by Frankel and Froot: regressive, adaptive, and distributed-lag-is based on recent empirical evidence suggesting that exchange-rate expectations may not be rational. the most surprising finding in the paper is that with adaptive and distributed-lag expectations, fiscal expansion has no initial impact on the exchange rate, and the same may be true for regressive expectations.     

Fiscal Policy and Economic Growth: the Role of Financial Intermediation

This paper analyzes the impact of public debt on financial efficiency in an overlapping‐generations model. We argue that public debt may reduce intermediation costs by increasing the collateral of entrepreneurs. This effect is stronger, the stronger the non‐Ricardian component of public debt, i.e. the more it is associated with intergenerational redistribution. This effect can be interpreted as future generations acting as a guarantee for the loans provided to the entrepreneurs of the current generation. Furthermore, multiple growth paths may arise as low taxes increase private collateral, which in turn boosts growth via financial efficiency, while higher growth allows to maintain the same debt/GDP ratio with reduced taxes.     

The Role of Fiscal and Monetary Policies in Sustaining Growth With Stability in India*

The performance of the Indian economy in recent years has attracted increasing international interest. This paper focuses on the role of fiscal and monetary policies in the evolution of the Indian economy over the years, with particular attention being given to the reforms undertaken in these policies since the early 1990s. The coordination of fiscal and monetary policies has been crucial in the sequencing of the economic reform process carried out since the early 1990s. Monetary policy aims to maintain a judicious balance between price stability and economic growth. With the opening up of the Indian economy and the spread of financial sector reforms aimed at functional autonomy, prudential strengthening, operational efficiency, and competitiveness of banks, considerations of financial stability have assumed greater importance in recent years alongside the increasing openness of the Indian economy. The biggest challenge facing the conduct of fiscal and monetary policy in India is to continue the accelerated growth process while maintaining price and financial stability. Therefore, the self‐imposed rule‐based fiscal correction at both the national and subnational levels has to be consolidated and carried forward. The existence of a high level of fiscal deficit also contributes to the persistence of an interest rate differential with the rest of the world, which then also constrains progress toward full capital account convertibility. The success achieved in revenue buoyancy through tax rationalization and compliance has to be strengthened further.     

财政平衡观与积极财政政策的可持续性

财政平衡理论是财政学体系的一个重要组成部分。财政收支矛盾是财政的主要矛盾,财政民歧矛盾是绝对的,平衡是相对的,其运动轨迹表现为“不平衡－平衡－不平衡”;另一方面,财政收支不是彼此依存、相互统一的,即绝对的财政收支矛盾（不平衡）可以转化为相对的财政收支统一（平衡）。因此,财政收支运动是按照“平衡－不平衡－平衡”的转变向前发展的。财政政策的可持续性实质上是财政风险的控制问题;“财政平衡”与“财政政策的可持续性”既有共通之处,也有差异之处。因此从整体上和中长期战略上看,必须实施平衡的财政政策。     

Modelling the Role of Government Policy in Post-War Australian Immigration*

The authors develop and estimate a model of post-war Australian migration which highlights an endogenous treatment of government policy and includes three equations explaining the emigration rate, the Government's Immigration Programme rate, and the immigration rate. The model permits the separate identification of long-run population growth influences vis-à-vis short-run economic considerations in explaining migration. Short-run labour market conditions are found to be more important in explaining government behaviour than are long-run population considerations. Immigrant behaviour appears to be affected by both short-run and long-run influences. Very little unexplained variation remains in the estimated regressions.     

The Public Accounts and Fiscal Policy

This article discusses the economy–wide effects of fiscal policy and major features of public outlays, receipts and debt trends in Australia.     

Monetary Union Enlargement,Fiscal Policy,and Strategic Wage Setting*

This contribution develops a framework for studying the effects of the enlargement of a monetary union on macroeconomic performances in the presence of strategic interactions between non‐atomistic labor unions, monetary, and fiscal authorities. We show that the integration of new identical member countries may have beneficial effects, depending on the fiscal policymaking structure. Qualifications to this result are provided under cross‐country asymmetries in the size of the economies, the structure of the labor markets, and the fiscal authorities' preferences.     

实施积极财政政策向可持续财政政策转型的构想

积极财政政策虽然在扩大内需上已经有所作为，但由于其负面作用的存在而不具有可持续性。为实现我国可持续发展的长期战略要求，我们应当适时实施由积极财政政策向可持续财政政策的转变。因此，应当对现行的财政支出政策进行调整，防范直接与间接财政风险的扩大化，完善现行税制，运用财政政策促进人力资本可持续发展。     

The Role of Fiscal Policy in a Monetary Union: are National Automatic Stabilizers Effective?*

We assess the role of national fiscal policies, as automatic stabilizers, within a monetary union. We use a two‐country New Keynesian DSGE model, incorporating non‐Ricardian consumers and a home bias in national consumption. Fiscal policy directly stabilizes non‐Ricardian agents' consumption. By doing so it contributes to the reduction in the volatility of variables such as output, wage inflation, and real interest rates. Our analysis of country‐specific shocks does not suggest potential inter‐country conflicts (as long as policies are constrained within the automatic stabilizers framework). However, we detect a potential conflict between the two consumer groups, because fiscal policy may raise optimizing agents' consumption volatility.     

The Macroeconomic Implications of Current Fiscal Policy

Exchange rate changes and intertemporal consumption responses suggest that the short-run impact of current fiscal policy on aggregate demand will be small. However, cuts to public expenditure may have undesirable long-term consequences.     

The Role of Trade and International Economic Policy in Indian Economic Performance*

India's economic policies have undergone major reforms since the early 1990s. Before that, government regulation and control of economic activity was pervasive, and the trade sector did very poorly. One consequence was that imports were highly restricted and their scarcity was itself a major constraint on growth. After the crisis of the early1990s, trade policy was substantially liberalized. In this paper, the pre‐1990s regime is first briefly described. Thereafter, the economic policy reforms that impinged most directly on the trade sector are set forth, and the response of exports and imports to those changes is outlined. Exports have grown rapidly, from about 5% of the gross domestic product to around 15%, and they continue to grow at an average annual rate of 20%. Improved performance of the trade sector has been a major contributing factor to India's dramatically accelerated growth performance. A final section of this paper assesses the current situation, and sets forth the major policy challenges that will need to be met if that performance is to be sustained, if not improved upon.     

Borrow and Adjust: Fiscal Policy and Sectoral Adjustment in an Open Economy*

Should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of nontraded to traded goods? This article considers normative fiscal policy implications of sectoral adjustment costs in a two‐sector model with overlapping generations. Fiscal deficits benefit present generations by depleting foreign assets and slowing down the adjustment process. We show that despite no nominal rigidities, temporary fiscal deficits increase social welfare if adjustment costs prevent immediate sectoral reallocation of inputs. If there are no adjustment costs, the case for fiscal deficits vanishes.     

财政货币政策在美国“新经济“发展中的作用

财政与货币政策是稳定和刺激经济增长的两大工具，在美国“新经济”发展中，这两大政策工具发挥了促进经济增长、缓解经济衰退、启动经济复苏的积极作用。我国正处于经济转轨时期，分析研究美国“新经济”发展中的财政货币政策的实践和经验，为我国应对入世挑战，抢抓发展机遇，在财政货币政策选择上提供了有益的借鉴。     

路径依赖对财政政策变迁的规范作用

财政政策作为一种政府主导的制度安排,其变迁的方向不是随机的,而是存在着路径依赖。当财政政策变迁存在着报酬递增和自我强化机制时,路径依赖就会对其产生规范作用。在一定程度上,财政政策的恰当性会进一步加强路径依赖的这种规范性作用。研究路径依赖对财政政策变迁的规范作用,对于推动我国财政政策的良性循环与变迁具有重要意义。