News

The indirect fiscal benefits of low-skilled immigration

The indirect fiscal great things about low-skilled immigration

You will find a widespread perception that low-skilled immigration is a fiscal burden for society. This column incorporates indirect fiscal ramifications of immigration that arise generally equilibrium into various models which were emphasised in the empirical immigration literature. It finds that the indirect fiscal effect is actually positive, with one low-skilled immigrant in america adding between $700 to $2,100 to the general public finances through this channel every year.

News

Government investment and fiscal stimulus

Government investment and fiscal stimulus

Fiscal stimulus packages typically feature large investment in infrastructure. The column argues that the fiscal multiplier connected with government investment through the Great Recession was near zero. Meanwhile, the federal government consumption multiplier was around 0.8. Estimates of the multiplier for total government purchases usually do not distinguish both of these effects, which might affect their validity.

Related

Through the Great Recession, governments enacted fiscal stimulus packages to combat the decline in economic activity. Significant shelling out for long-lived investment goods was common to these policies. In america, for example, the American Recovery and Reinvestment Act of 2009 contained provisions to improve funding to spend a lot more than $70 billion on infrastructure and transportation. 1

News

Fiscal sustainability in japan what to tackle

Fiscal sustainability in Japan: What things to tackle

Japan leads the advanced economies in the speed and magnitude of demographic ageing and gets the highest debt-to-output ratio. Rising social insurance expenditures are projected to far outpace revenues also to create a fiscal burden. This column presents sobering projections for Japanese government debt in the lack of reform, but argues a mix of policies, including policies to encourage greater labour participation by women also to enhance productivity, could achieve sustainability.

News

Fiscal tightening and economic growth

For every sample period, three estimation approaches are used – ordinary least squares, ordinary least squares excluding Greece from the sample, and robust regressions. The estimated coefficient on the change in the cyclically adjusted primary balance ranges between -0.7 and -1.4, and is statistically significant in 8 of the 12 estimated regressions. When Greece is excluded, the coefficient ranges between -0.7 and -0.8. Trading partner growth interaction with the exports share is positive and significant in 9 out of 12 specifications. Pre-crisis growth is positively connected with growth and significantly so in two of the specifications. Real interest levels display the expected negative sign but also for the most part aren’t statistically significant. The change in the true effective exchange rate isn’t significantly linked to growth in these estimations.

News

Fiscal stimulus in times of high public debt reconsidering multipliers and twin deficits vox, cepr

Fiscal multipliers and twin deficits: How everything fits together

The national income accounting identities reveal that current account equals the gap between total domestic saving and investment. The public-sector deficit measures public dis-saving. The result of the ‘twin deficits’ (government and current account) to a fiscal shock is thus associated with how private saving and investment choice respond to the shock.

Specifically, private agents’ behaviour depend, inter alia, on what fiscal shocks are perceived. These perceptions will normally rely upon the economic environment – especially debt sustainability.

News

Fiscal stimulus via ‘helicopter tax credits’

Fiscal stimulus via ‘helicopter tax credits’

The effect of the clauses will be way much less pro-cyclical than cutting public expenditure and/or raising taxes, as under EU rules, given that they wouldn’t normally drain purchasing power from the economy and would only replace TCCs for euro in investor portfolios.

By combining the introduction of TCCs with the above safeguards, each Eurozone country can trigger a robust recovery while fulfilling the Fiscal Compact and the OMT programme announced by the ECB in 2012, whereby a country’s public debt is guaranteed by the ECB for as long it commits to balancing the budget also to gradually reducing the general public debt-to-GDP ratio (to 60%). Currently, crisis countries lack the instrument to execute countercyclical macroeconomic policies. The TCC programme would provide that instrument, while preventing the ECB have to guarantee increasing volumes of public debts – as TCCs aren’t to be reimbursed, issuing countries can’t be forced to default on them, making the ECB guarantee unnecessary.

News

Fiscal stimulus for debt-intolerant countries

Emerging markets on the eve of the sub-prime shock

Fortunately for most emerging markets, this synchronous export and financing shock from the North came once they had built vast war chests of international reserves through the “bonanza” years (Figure 1). Emerging market reserve managers learned the lesson of the Asian Crisis – when times get tough, the advanced economies look inward, so emerging markets’ first type of defence should be their own resources. In the fat years, commodity prices were booming, growth in the North was buoyant, international interest levels were low and stable, and international capital was plentiful. In this environment, fiscal positions in lots of emerging markets improved markedly. Public debt levels were stabilised as well as reduced, and several countries substituted public external debt with domestic debt and lengthened the maturities of their outstanding debt.

News

Fiscal space and low interest rates a eurozone perspective

Fiscal space and low interest: A Eurozone perspective

The European Commission has just needed a fiscal stance that’s more supportive of the recovery and of monetary policy in the Eurozone. This column argues that the case is strong for spending now on investment and other targeted programmes supporting growth and employment. However, fiscal space is heterogeneously distributed over the Eurozone, with some countries in a position to exploit a clear margin, and others having to pursue a far more prudent approach of gradual debt unwinding. A common stabilisation capacity would help for managing shocks that can’t be absorbed by national stabilisers alone.

News

Fiscal space, government spending, and tax rate cyclicality patterns

Fiscal space, government-spending, and tax-rate cyclicality patterns: A cross-country comparison, 1960-2016

The upward trajectory of policy interest levels in OECD countries will impose growing fiscal challenges, testing their fiscal convenience of countercyclical policy and therefore their resilience. This column compares fiscal cyclicality across countries and identifies measures of fiscal space. The results reveal a mixed fiscal scenery, where over fifty percent of countries are characterised by limited fiscal space, and fiscal policy is either procyclical or acyclical.

Bali

Fiscal stabilisation in monetary unions

Stabilisation of common and asymmetric shocks

The stabilisation from market mechanisms and other existing instruments is bound, and this may be the economic rationale for fiscal stabilisation in a monetary union. Factor mobility really helps to smooth the result of large shocks (Asdrubali et al. 1996, Nikolov 2016), however the Great Recession showed that market stabilisation is normally inadequate (Berger et al. 2018) because markets have a tendency to behave pro-cyclically (Furceri and Zdzienicka 2015, Ferrari and Rogantini-Picco 2016).