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1
Mijatovic, Bosko. "Economic and financial aspects of Serbia's regionalization." Zbornik Matice srpske za drustvene nauke, no. 112-113 (2002): 69–96. http://dx.doi.org/10.2298/zmsdn0213069m.
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The paper has two parts: in the first one, economic aspect of regionalization is considered, in the second a financial one. Regionalization, like every type of decentralization, represents a serious reform of a state and brings upon several expected as well as unexpected although significant effects on political, social, and economic life. Its goal is an improvement of political, social, and economic functions of a state, not their deterioration. Unfortunately, experience of other countries does not support overwhelming optimism. Most frequently, regionalization is done due to political considerations; economic considerations are of secondary importance or even neglected. Such a dominance of political reasoning neglects fundamental principles and arguments of the economic science, standards of rational approach to decentralization, and even economic efficiency and equality between citizens. Because of that, the emphasis in this paper is on economic and financial aspects of regionalization in Serbia. In the first part the author explores economic aspects of regionalization; four state functions (regulation, stabilization, redistribution, and allocation) in decentralized setting; relations between regionalization, deregulation, and privatization; vertical distribution of functions (exclusive functions by the state, exclusive functions by regions, shared functions). After that he explores advantages of the selected model of creating regions and distribution of authorities in Serbia, particularly economic authorities of regions (1. land planning, urban land use, housing; 2. development and maintenance of infrastructure of regional importance and coordination of public utilities in municipalities; 3. agriculture; 4. tourism; 5. forestry 6. hunting and fishing; 7. vocational training and employment; 8. ecology; 9. public works). Separate section is devoted to social protection (financial transfers and institutions). In the second part of the paper (Financing the Regions) the author first examines certain issues in principle (fiscal revenues, vertical and horizontal balance, debts and moral hazard) and then considers topics of financing regions in Serbia, such as revenues subsidies, and debts.
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Müller, Klaus, and Rudi Schmidt. "Von der griechischen zur europäischen Krise." PROKLA. Zeitschrift für kritische Sozialwissenschaft 40, no. 159 (June 1, 2010): 277–300. http://dx.doi.org/10.32387/prokla.v40i159.396.
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Membership in the Euro-Zone did not help Greece to escape the global financial crisis. To be sure, Greek’s backward economic structure and its corrupt political culture of clientelism and taxevasion as well as an overblown incompetent administration drove the country into deep public debts and deficits. Nevertheless, the actual crisis started with several external shocks and was exacerbated by discord in the euro-zone. Afraid of abetting French ambitions towards an ‘economic government’, the German government delayed common approaches to fend of speculation against ‘deficit sinners’ and invited the IMF - thereby opening the window for speculative attacks against the euro-zone as a whole. It remains to be seen if the recently improvised European Stabilization Mechanism can be a first step towards an overdue economic complement to EMU or if it will generalize IMF-style structural adjustments inside the EU. The latter ‘solution’ of the European crisis would, as already observable in the Baltics, put heavy social costs on deficit countries and undermine the justifications given for European integration, namely to secure convergence, cohesion and solidarity between its members.
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Lampe, John. "Stabilizing southeastern Europe, financial legacies and European lessons from the first world war." Ekonomski anali 59, no. 203 (2014): 7–28. http://dx.doi.org/10.2298/eka1403007l.
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This paper pays brief attention, although more than the recent flood of 1914 centenary books, to economic causes of the First World War before turning to it fateful economic consequences for Southeastern Europe. The Austrian lack of economic leverage over Serbia is cited as a reason for its resort to the military option. At the war?s end, the option of the victorious powers to provide significant economic relief to the region where the conflict had begun was not taken. After tracking the brief, limited assistance provided, the paper reviews to the massive economic problems confronting four of the five of independent states, neglecting Albania as a special case, that could now be called Southeastern Europe. First Greece and then Bulgaria faced forced inflow of refugees. Romania and the Yugoslav Kingdom faced the economic integration of large new, formerly Austro-Hungarian lands. All of them were left not only with war deaths and destruction but also with large war debts, or in Bulgaria?s case, reparations. The paper concentrates on the primary Western response to these four economies, an effort led by the Bank of England to replace immediate postwar inflation with the deflation needed to reestablish currencies with prewar convertibility to gold, now with Pound Sterling added to a gold reserve standard. Independent central banks, the major positive legacy of this initiative, were to lead the way. But the financial stability that all four economies did eventually achieve in the 1920s served only to reduce their war debts. Otherwise, maintaining the fixed and overvalued exchange rates restricted domestic credit, encouraged protective tariffs, and did not attract the foreign capital, especially new state loans, that this emphasis on a single, European financial framework had promised. A concluding section considers the lessons learned from a postwar period that promoted economic disintegration by the 1930s. Looking at the period since the end of the Cold War and then the wars of Yugoslavia?s dissolution, we see EU leadership in the reduction of trade barriers, the promotion of common fiscal practice and the prospect of genuine European integration as Western lessons learned. Within the region, independent central banks have helped the process. But the stabilization of currencies around the overvalued Euro has posed a familiar post- 1918 problem since the European downturn of 2008.
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Nkwatoh, Louis S. "Does ECOWAS Macroeconomic Convergence Criteria Satisfy an Optimum Currency Area?" Journal of Economics and Management Sciences 1, no. 2 (August 29, 2018): p61. http://dx.doi.org/10.30560/jems.v1n2p61.
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The Economic Community of West African States (ECOWAS) countries have expressed their desire to establish a monetary union by the year 2020 based on six macroeconomic convergence criteria. The desire is predicated on a series of strategies and various treaties ratified and signed by various ECOWAS Heads of governments and Central Banks’ Governors with more emphasis on the Maastricht-type set of convergence criteria that must be satisfied by all member countries before they ascend to the envisaged monetary union. Even though the convergence criteria may guarantee macroeconomic stability in a regional grouping, critics assert that the convergence criteria are insufficient and inconsequential to the formation of monetary union. The objective of this study is to ascertain whether ECOWAS countries have met all the macroeconomic convergence criteria making them fit for a monetary union. The analyses indicate that no ECOWAS country has met all the convergence criteria at a given point in time implying that the level of macroeconomic convergence in the region still remains inadequate relative to the set targets. However, WAEMU sub-set economies have met three of the criteria -public debts to GDP Ratio, deficits including grants, annual percentage inflation rate. The simple reason is that WAEMU is an existing monetary union with a common stabilization policy.
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Volkova, Nelia, and Diana Vinhora. "Problem Credit Debt of Ukrainian Banks: Current Status and Ways to overcome it." Modern Economics 23, no. 1 (October 27, 2020): 37–43. http://dx.doi.org/10.31521/modecon.v23(2020)-06.
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Introduction. The article is devoted to the study of problem about credit indebtedness of Ukrainian banks at the present stage and to identifying ways to overcome it. The article analyzes the loan portfolio of Ukrainian banks during 2014-2020. For the last five years, the banking system of Ukraine has been developing in the conditions of military conflict and permanent political and economic crisis. After the occupation of the Autonomous Republic of Crimea and certain regions of Donetsk and Luhansk, domestic commercial banks lost part of their assets that remained in the occupied territories. These events forced the National Bank of Ukraine to take measures to stabilize the credit system, which led to the withdrawal of a large number of insolvent banks from the market. Purpose. The purpose of the study is to analyze the current state of credit debt problem of Ukrainian banks and to identify ways to neutralize it. Results. Based on statistical data, the dynamics of individual assets of Ukrainian banks, characterized by the discount rate as the main deterrent to lending, certain factors influencing the emergence of problem loans in a banking institution. Statistical data on the volume of lending to banking institutions by business entities and individuals in Ukraine are presented and analyzed. Based on the analysis, the main factors of increasing creditworthiness are investigated. Based on world experience, we offer ways to overcome the problematic team of domestic banks in the rear stabilization of the credit system. Conclusions. The conducted research confirmed the theoretical expediency and practical significance of the analysis of the current state of credit indebtedness problem of Ukrainian banks, which allows to determine the ways of its neutralization. The assessment of some indicators of banks’ activity revealed a number of factors that negatively affect the work with problem loans, namely: reduction in the number of banks (in particular, banks with foreign capital), reduction in lending, which is directly related to rising interest rates on loans, real incomes, the devaluation of the national currency and more. Each bank must develop a set of measures applicable to a particular category of problem loans, work out algorithms for the interaction of units in the event of certain signs, options for behavior depending on the degree of effectiveness of the measures applied. Implementation of the proposed banks in practice measures to reduce bad debts will be the subject of our further study.
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OSINUBI, TOKUNBO SIMBOWALE, RISIKAT OLADOYIN S. DAUDA, and OLADELE EMMANUEL OLALERU. "BUDGET DEFICITS, EXTERNAL DEBT AND ECONOMIC GROWTH IN NIGERIA." Singapore Economic Review 55, no. 03 (September 2010): 491–521. http://dx.doi.org/10.1142/s0217590810003869.
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The necessity for governments to borrow in order to finance deficit budgets has led to the development of external debt. This study examines how the use of budget deficits as an instrument of stabilization leads to the accumulation of external debt with the attending effects on growth in Nigeria between 1970 and 2003. By synthesizing a relationship between budget deficits and external debt the study shows the implications on economic growth of conducting a fiscal policy within the contexts of debt stabilization and debt sustainability. The results of the econometric analysis confirm the existence of the debt Laffer curve and the nonlinear effects of external debt on growth in Nigeria. The study concludes that if debt-financed budget deficits are operated in order to stabilize the debt ratio at the optimum sustainable level debt overhang problems would be avoided and the benefits of external borrowing would be maximized.
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Bienen, Henry S., and Mark Gersovitz. "Economic stabilization, conditionality, and political stability." International Organization 39, no. 4 (1985): 729–54. http://dx.doi.org/10.1017/s0020818300027089.
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IMF conditionality is seldom so important that it dominates all other considerations for political stability. IMF stabilization programs often shift benefits from one group to another. They expose elites to charges of selling the sovereignty of their countries. The imposition of IMF conditions, particularly subsidy cuts, may lead to sharp outbreaks of civil disorder. Nonetheless, the IMF provides resources that make adjustment easier and thus may lessen the chances of political instability for a country. IMF programs are seldom implemented fully as negotiated, and the penalties for partial compliance are not great. Debtor countries have more flexibility in imposing austerity measures, and the economic constraints are less binding than often assumed. The very availability of alternatives to IMF programs results in internal divisions because some favor debt repudiation and others oppose it. Groups now contend over solutions to the debt problems of their countries.
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Kitano, Shigeto. "Nominal debt and inflation stabilization." International Journal of Economic Theory 5, no. 4 (December 2009): 409–22. http://dx.doi.org/10.1111/j.1742-7363.2009.00116.x.
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Dornbusch, Rudiger, Jose Vinals, and Richard Portes. "Mexico: Stabilization, Debt and Growth." Economic Policy 3, no. 7 (October 1988): 231. http://dx.doi.org/10.2307/1344488.
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Leith, Campbell, Ioana Moldovan, and Simon Wren-Lewis. "DEBT STABILIZATION IN A NON-RICARDIAN ECONOMY." Macroeconomic Dynamics 23, no. 06 (June 28, 2018): 2509–43. http://dx.doi.org/10.1017/s1365100517000797.
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In models with a representative infinitely lived household, tax smoothing implies that the steady state of government debt should follow a random walk. This is unlikely to be the case in overlapping generations (OLG) economies, where the equilibrium interest rate may differ from the policy maker's rate of time preference. It may therefore be optimal to reduce debt today to reduce distortionary taxation in the future. In addition, the level of the capital stock in these economies is likely to be suboptimally low, and reducing government debt will crowd in additional capital. Using a version of the Blanchard-Yaari model of perpetual youth, with both public and private capital, we show that it is optimal in steady state for the government to hold assets. However, we also show how and why this level of government assets can fall short of both the level of debt that achieves the optimal capital stock and the level that eliminates income taxes. Finally, we compute the optimal adjustment path to this steady state.
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Schnabl, Gunther, and Nils Sonnenberg. "Monetary Policy, Financial Regulation and Financial Stability: A Comparison between the Fed and the ECB in the Wake of the Global Financial Crisis." ORDO 71, no. 1 (April 1, 2020): 180–210. http://dx.doi.org/10.1515/ordo-2021-0002.
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Abstract The paper discusses in light of Austrian and Keynesian economic theory the impact of conventional and unconventional monetary policies as therapies for financial crises. It reviews the financial market stabilization measures of the Federal Reserve System and the Eurosystem in response to the US subprime crisis and the European financial and debt crisis. It shows that stabilization measures both in the US and the euro area are based on Keynesian thinking, whereas longer-term consequences of financial stabilization measures tend to be neglected. It is argued that the Federal Reserve System’s crisis measures were more directed towards stabilizing the banking system, whereas the European Central Bank first and foremost focused on debt sustainability of euro area crisis countries. In both cases, household credit growth remained under control despite renewed monetary expansion, while new imbalances emerged in the banking and corporate sector as suggested by Austrian economic theory.
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Corsetti, Giancarlo, Keith Kuester, André Meier, and Gernot J. Müller. "Debt Consolidation and Fiscal Stabilization of Deep Recessions." American Economic Review 100, no. 2 (May 1, 2010): 41–45. http://dx.doi.org/10.1257/aer.100.2.41.
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Sitepu, Vido Metti. "The Effect of Foreign Direct Investment and External Debt on Economic Growth in Indonesia." International Journal on Social Science, Economics and Art 11, no. 2 (August 1, 2021): 78–82. http://dx.doi.org/10.35335/ijosea.v11i2.50.
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Indonesia as a development country, has a good economic growth in the 1990's. It shows by increasing of GDP year by year, stabilization of inflation, etc. But since 1997's economic crisis in Asia's countries, Indonesia's economic growth has been declining. It effected the monetary sector and real sector, and add again with progressively the amount of foreign debt of Indonesia, so that effect of Rupiah rate wich progressively weakening. This paper will analyze the foreign direct investment also foreign debt, on the economic growth of Indonesia. By using the OLS model on Indonesia yearly data from 1975-2009 and the confirm the significant of these independent variables as the factors that effected the economic growth of Indonesia. Foreign direct investment and foreing debt represent the way able to be gone through by government in overcoming deficit of national saving utilize to push the national development to get the good economic growth. Pursuant to things told above, writer try to study the problem of economic growth in Indonesia in its relation with the foreign direct investment and foreign debt by lifting title “Influence on The Foreign Direct Investment and The Foreign Debt to Economic Growth of Indonesia”.
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Loisel, Olivier. "The implementation of stabilization policy." Theoretical Economics 16, no. 2 (2021): 677–716. http://dx.doi.org/10.3982/te3322.
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In locally linearized dynamic stochastic rational‐expectations models, I introduce the concepts of feasible paths (paths on which the policy instrument can be expressed as a function of the policymaker's observation set) and implementable paths (paths that can be obtained, in a minimally robust way, as the unique local equilibrium under a policy‐instrument rule consistent with the policymaker's observation set). I show that, for relevant observation sets, the optimal feasible path under monetary policy can be non‐implementable in the new Keynesian model, while constant‐debt feasible paths under tax policy are always implementable in the real business cycle model. The first result sounds a note of caution about one of the main lessons of the new Keynesian literature, namely the importance for central banks to track some key unobserved exogenous rates of interest, while the second result restores to some extent the role of income or labor‐income taxes in safely stabilizing public debt. For any given implementable path, I show how to design arithmetically a policy‐instrument rule consistent with the policymaker's observation set and implementing this path as the robustly unique local equilibrium.
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Dornbusch, Rudiger, Jean-Pierre Danthine, and Patrick Honohan. "Credibility, Debt and Unemployment: Ireland's Failed Stabilization." Economic Policy 4, no. 8 (April 1989): 173. http://dx.doi.org/10.2307/1344467.
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Anevlavis, Tzanis, George Papavassilopoulos, Jacob Engwerda, and Bas van Aarle. "DEBT STABILIZATION IN THE PRESENCE OF ENDOGENOUS RISK PREMIA: A DYNAMIC GAME APPROACH." Macroeconomic Dynamics 23, no. 07 (January 14, 2018): 2616–48. http://dx.doi.org/10.1017/s1365100517000906.
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This paper focuses on the possibility that financial markets require risk premia on holding sovereign debt of countries that appear vulnerable from a fiscal sustainability perspective. Both the level of debt as well as the rate of change of debt are assumed to impact on the risk premium. We analyze the impact of such an endogenous risk premium in a simple debt game between a monetary and a fiscal player, as introduced by [Tabellini (1986) Journal of Economic Dynamics and Control 10, 427–442]. The risk premium term adds a nonlinearity to the linear model in case risk premia are absent. We analyze outcomes in case of noncooperative open-loop Nash strategies and in case of cooperative strategies and consider the workings of the risk premium as a market-based disciplining device (in case of high debt) and adjustment rewarding device (in case of a declining debt trajectory).
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Velasco, Andres. "Real Interest Rates and Government Debt during Stabilization." Journal of Money, Credit and Banking 25, no. 2 (May 1993): 259. http://dx.doi.org/10.2307/2077841.
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OHDANSKA, Olha, and Viktoriia MAKARENKO. "Analysis of the state and dynamics of the public debt of Ukraine." Economics. Finances. Law, no. 12 (December 5, 2019): 23–25. http://dx.doi.org/10.37634/efp.2019.12.5.
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Introduction. It has been indicated that high level of debt burden in Ukraine in the conditions of insufficient budgetary funds and volatile economic and political situation exerts negative impact both upon the economy of the country and its every sector. This actualizes the research on the state and dynamics of the public debt within the context of achieving stabilization of economic processes, particularly Ukraine’s integration into global economic environment. The purpose of the paper is the analysis of the state and dynamics of the public debt of Ukraine in the context of solving the problems of its servicing. Results. It has been established that the major trend in Ukraine is a rapid increase in the total public debt which testifies to the instability and crisis events in the country’s economy. It has been defined that public and publicly guaranteed debt of Ukraine in Hryvnia equivalent is growing from year to year (increased by 106 times in 2018 as compared to 1996), while major periods of accelerated growth of public debt occurred during the periods of economic and financial crises (2008-2010 and 2014-2018). It has been determined that in 1999 and during 2014-2018 public and publicly guaranteed debt exceeded the critical limit of 60%, which asserts the presence of crisis events in the economy. It has been substantiated that there exists a close correlation between the public debt and change in currency exchange rate (correlation coefficient of 0,99 – very high bond strength on the Chaddock scale). It is revealed that the public debt-to-GDP ratio reaches maximum levels in the periods of economic crises and decreases in the periods of economic upturn. Conclusion. Hence, the issue of the debt-related security in Ukraine is topical and affects the economic situation. Prospects of further research in this area lie with solving the issues of managing public debt through changing the direction of the economic policy of the country as well as the scientific substantiation of managing public debt employing advanced economic instruments and progressive global practices.
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ALBERTO CINQUETTI, Carlos, and Ricardo GONÇALVES SILVA. "DELAYS IN STABILIZATION OR IN REFORMS? THE DEBT CRISIS." Developing Economies 46, no. 3 (August 22, 2008): 290–314. http://dx.doi.org/10.1111/j.1746-1049.2008.00067.x.
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Asada, Toichiro. "Stabilization policy in a Keynes–Goodwin model with debt accumulation." Structural Change and Economic Dynamics 17, no. 4 (December 2006): 466–85. http://dx.doi.org/10.1016/j.strueco.2006.08.002.
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van Wijnbergen, Sweder, and Nina Budina. "Inflation Stabilization, Fiscal Deficits, and Public Debt Management in Poland." Journal of Comparative Economics 29, no. 2 (June 2001): 293–309. http://dx.doi.org/10.1006/jcec.2001.1710.
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Cadenillas, Abel, and Ricardo Huamán-Aguilar. "The Optimal Control of Government Stabilization Funds." Mathematics 8, no. 11 (November 6, 2020): 1975. http://dx.doi.org/10.3390/math8111975.
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We study the optimal control of a government stabilization fund, which is a mechanism to save money during good economic times to be used in bad economic times. The objective of the fund manager is to keep the fund as close as possible to a predetermined target. Accordingly, we consider a running cost associated with the difference between the actual fiscal fund and the fund target. The fund manager exerts control over the fund by making deposits in or withdrawals from the fund. The withdrawals are used to pay public debt or to finance government programs. We obtain, for the first time in the literature, the optimal band for the government stabilization fund. Our results are of interest to practitioners. For instance, we find that the higher the volatility, the larger the size of the optimal band. In particular, each country and state should have its own optimal fund band, in contrast to the “one-size-fits-all” approach that is often used in practice.
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Cheng, Chunyang. "A Study on the Financing Effect of U.S. Debt from the Perspective of Modern Monetary Theory-Also on the Innovation Driving Effect of Monetary Sovereignty." E3S Web of Conferences 275 (2021): 03030. http://dx.doi.org/10.1051/e3sconf/202127503030.
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The traditional view is that China uses the foreign exchange income earned from the trade surplus to purchase U.S. treasury bonds, which provides financing for U.S. government expenditures and maintains the sustainability of U.S. public debt. Based on the modern monetary theory, this paper analyzes this phenomenon and believes that China’s trade surplus cannot finance US government expenditures. U.S. debt issuance can exert interest rate stabilization effect, exchange rate stabilization effect, currency issuance effect and innovation “crowding-out” effect, but it has no financing effect. Therefore, this paper puts forward some policy suggestions, such as increasing the central government expenditure and the issuance of treasury bonds, and implementing the reform of floating exchange rate system, in order to increase the monetary sovereignty of our country and give full play to the government’s role in promoting domestic economic innovation.
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Missale, Alessandro, Francesco Giavazzi, and Pierpaolo Benigno. "How is the Debt Managed? Learning from Fiscal Stabilizations." Scandinavian Journal of Economics 104, no. 3 (September 2002): 443–69. http://dx.doi.org/10.1111/1467-9442.00296.
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Dmitrieva, O. "Deformation of Fiscal Policy and Debt Management as a Result of the Stabilization Fund Forming." Voprosy Ekonomiki, no. 3 (March 20, 2013): 20–32. http://dx.doi.org/10.32609/0042-8736-2013-3-20-32.
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The article shows the systematic mistake in the form of underestimation of project budget revenues. It is accompanied by the artificial increase in budget deficit which causes excessive borrowings and debt growth while in fact budget surplus takes place. It is proved that state borrowing and saving of assets in the sovereign funds (Reserve Fund and National Wealth Fund) lead to a combination of negative effects related to both deficit and surplus budgets: artificial slowdown of economic growth and increase in expenses for debt service.
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Lowenthal, Abraham F., and Robert R. Kaufman. "The Politics of Debt in Argentina, Brazil and Mexico: Economic Stabilization in the 1980s." Foreign Affairs 68, no. 2 (1989): 197. http://dx.doi.org/10.2307/20043958.
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Di Bartolomeo, Giovanni, Marco Di Pietro, Enrico Saltari, and Willi Semmler. "Public debt stabilization: the relevance of policymakers’ time horizons." Public Choice 177, no. 3-4 (July 7, 2018): 287–99. http://dx.doi.org/10.1007/s11127-018-0584-7.
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Haggard, Stephan. "The politics of adjustment: lessons from the IMF's Extended Fund Facility." International Organization 39, no. 3 (1985): 505–34. http://dx.doi.org/10.1017/s0020818300019160.
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The international debt crisis has forced painful economic adjustments on the developing world. In the short run it has forced governments to seek to correct payments imbalances through stabilization programs, usually undertaken with conditional assistance from the International Monetary Fund (IMF). The crisis has also revealed deeper weaknesses in many Third World economies, weaknesses demanding more basic reforms in the structure of incentives, prices, and investment.
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Díaz-Roldán, Carmen, José Luis Parada-Rodríguez, and Nieves Carmona-González. "Austerity policies in the Eurozone: How they affect youth unemployment?" Central European Review of Economics and Management 3, no. 2 (June 26, 2019): 7. http://dx.doi.org/10.29015/cerem.753.
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Aim: Analyse the effects of stabilization policies on youth unemployment, using government deficit besides the use of fiscal policy by the supply side; aimed to characterize the economic framework conditions under which fiscal policy could reduce youth unemployment. Design/Research methods: We consider an economic framework featuring the use of monetary and fiscal rules within a monetary union. In this scenario, that should be representative of the Eurozone, we will analyse the effects of stabilization policies when dealing with a financial crisis which produces contractive effects on output and on employment. We will pay special attention to the conservativeness of the central bank, the degree of austerity of the fiscal authorities and the initial level of government debt. Those characteristics prove to be crucial for the sustainability of economic policies packages based on fiscal consolidation and the use of fiscal policy instruments by the supply side, when trying to deal with unemployment. And given that in the financial crisis effects have been hit Eurozone countries in a different manner, we will also differentiate monetary union’s member countries according with their government debt and their unemployment path. Conclusions/findings: Fiscal authorities should be no austere for fighting youth unemployment, when using fiscal policy by the supply side. In other words, when optimizing their loss function, they should give more weight to the output stabilization goal that to the government deficit reduction. Originality/value of the article: Allowing for the use of both monetary and fiscal policy rules, in the scenario of a monetary union, our results could help us to stablish the conditions under which fiscal policy could help to alleviate youth unemployment.
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Engwerda, Jacob, Bas van Aarle, Joseph Plasmans, and Arie Weeren. "Debt stabilization games in the presence of risk premia." Journal of Economic Dynamics and Control 37, no. 12 (December 2013): 2525–46. http://dx.doi.org/10.1016/j.jedc.2013.06.008.
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van Aarle, Bas, Lans Bovenberg, and Matthias Raith. "Monetary and fiscal policy interaction and government debt stabilization." Journal of Economics 62, no. 2 (June 1995): 111–40. http://dx.doi.org/10.1007/bf01226006.
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Makoto, Richard, Takawira Mumvuma, and Phineas G. Kadenge. "Public Debt Composition, Debt Policy Rules and Growth in Selected SADC Countries." Journal of Business and Social Review in Emerging Economies 6, no. 3 (October 12, 2020): 1063–74. http://dx.doi.org/10.26710/jbsee.v6i3.1165.
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Purpose: This study examined the relative effect of debt composition and debt reduction policy rule on economic growth in selected SADC countries which are Mauritius, Tanzania and Zimbabwe. Design/Methodology/Approach The Markov-switching method was used to estimate the debt growth model for the period 1990Q1-2016Q4
Findings:. The effects of debt proved to be regime dependent which supports the time effects of debt in all countries. High external debt relative to domestic debt had positive effect on growth in Tanzania which is a good reforming country and had negative effects in the case of Zimbabwe which is a debt distressed country. In comparison to Mauritius, a domestic debt dependent country, high domestic debt relative to external debt had negative impact on growth. The effects tend to rise with market pressure and government consumption behaviour. A negative real effect of debt reduction policy rule was confirmed for Zimbabwe and irrelevance in countries with less threat of debt distress.
Implications/Originality/Value Therefore the study found support to the quantity-effect rather than type-effect of debt on growth. We recommended that countries should consider both time and quantity effects of debt in debt management; adopt explicit debt reduction rules which constrain fiscal behaviour and force policy commitment towards debt stabilization.
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Emmanuel, Obademi Olalekan. "A Macro Analysis of Bank Performance in Debt-Burdened Countries: The Case of Nigeria." American Journal of Business and Management 2, no. 2 (May 30, 2013): 165. http://dx.doi.org/10.11634/216796061706284.
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In this study the focus is on the long-run relationship and impact of public debt on banking industry performance i.e. a macro-analysis in Nigeria using different performance indices such as total bank lending, total bank deposit and total bank branches between the period1975-2005. A general macro model underpinned by a simultaneous equation using a vector auto-regression estimation approach was done with the objective of sensitising countries on the need for caution on public debt. The findings are that public debt impacts negatively on bank performance but the extent of impact is different on the variables chosen in this study. The analysis carried out show that domestic debt impacts most negatively on total bank lending while external debt impacts most negatively on total bank deposit. It is believed that though domestic debt can be used as an instrument of economic stabilization, nonetheless, in the choice of whether to use domestic debt or external debt it may be more expedient to use external debt based on the outcome of this study though it should be stated that in doing that still, adequate care must be taken to maintain an acceptable Debt/GDP ratio needed for debt sustainability.
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Carratù, Maria, Bruno Chiarini, Antonella D’Agostino, Elisabetta Marzano, and Andrea Regoli. "Air pollution and public finance: evidence for European countries." Journal of Economic Studies 46, no. 7 (November 11, 2019): 1398–417. http://dx.doi.org/10.1108/jes-03-2019-0116.
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Purpose The purpose of this paper is to investigate whether a statistically significant relationship exists between environmental quality, as measured by consumption-related air pollution, and public debt in Europe. In addition, since the debt burden is one of the most important indicators of fiscal soundness within the European Union (EU) Treaty and the subsequent fiscal compact, the authors propose a simple test to determine whether participation in EU Treaties has shaped the empirical relationship between fiscal policy/public debt and environmental performance. Design/methodology/approach To this end, the authors built a panel data set that covers 24 European countries over the period 1996–2015. Findings The aspect that the authors want to underline is a possible trade off, which is confirmed in the empirical analysis, between the public finance equilibrium and the maintenance of a public good such as air quality. However, there are important non-linearities that shape the interaction between public debt and environmental pollution. Similarly, threshold effects arise when the authors examine the interaction between EU regulation and public debt and when the authors separately examine high debt and low debt countries. When the authors account for the stabilization rules introduced by EU Treaties, a negative effect on pollution is evident; in this way, fiscal consolidation limits the positive effect of fiscal policy. Practical implications The results point out the existence of a potential trade-off between the role of EU as a regulator aiming to mitigate environmental pollution, and its role within the Stability and Growth Pact. The analysis highlights that fiscal consolidation policies, while facilitating the achievement of macroeconomic stability within EU, might have a negative side effect on the environment quality, which spreads beyond the borders of one single country. Originality/value While a number of studies have suggested that fiscal spending might contribute to the level of pollution in European countries, there is scant evidence of the effect of public debt on environmental performance. This lack of scientific knowledge is a serious shortcoming, since it may allow for an underrepresentation of the wide-ranging consequences of stabilization programmes targeting the debt-to-GDP ratio, which could affect environmental quality.
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Jackson, Laura E., Michael T. Owyang, and Sarah Zubairy. "Debt and stabilization policy: Evidence from a Euro Area FAVAR." Journal of Economic Dynamics and Control 93 (August 2018): 67–91. http://dx.doi.org/10.1016/j.jedc.2018.02.001.
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Kuznetsov, A. V., and S. A. Morozov. "Debt sustainability of the Argentine Republic: Problems and prospects." Finance and Credit 26, no. 10 (October 29, 2020): 2346–63. http://dx.doi.org/10.24891/fc.26.10.2346.
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Subject. The article reveals the relationship between the increasing cost of servicing the current government debt and ensuring the debt sustainability of default economy, on the case of the Argentine Republic. Objectives. The study aims at conducting a comprehensive analysis of origins and mechanisms for resolving debt crises in the Argentine Republic. Methods. The study rests on methods of analysis, synthesis and extrapolation, using the database of the IMF, the Ministry of Economy, and the Central Bank of Argentina. Results. We discuss the approaches of the administration and the Central Bank of Argentina to the implementation of anti-crisis fiscal and monetary policy, reveal the details of Argentina's interaction with the IMF in providing assistance in the financial stabilization of the economy, show the economic consequences of excessive debt burden, present the data on the repayment of Argentina's public debt in the long run. The paper summarizes the distinctive features of the current debt of Argentina restructuring, including the increasing socio-economic and political risks. Conclusions. The distrust in debt securities and creditworthiness in the Argentine Republic increases the risk of serial default. The lack of the State's ability to provide financial support to the national corporate sector is reflected at the level of poverty, unemployment, and, as a result, it has an impact on the mood of the population, which threatens the intensity of riots that may spread outside the Argentine Republic.
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Kuncoro, Haryo. "Does the Credible Fiscal Policy Support the Prices Stabilization?" Review of Economic Perspectives 15, no. 2 (June 1, 2015): 137–56. http://dx.doi.org/10.1515/revecp-2015-0014.
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Abstract This paper aims at analyzing the co-movement between fiscal policy and monetary policy rules in the context of price stabilization. More specifically, we observe the potential impact of fiscal policy credibility on the price stabilization in the inflation targeting framework. Motivated by the fact that empirical studies concerning this aspect are still limited, we take the case of Indonesia over the period 2001-2013. Based on the quarterly data analysis, we found that the impact of credibility typically depends on characteristics of fiscal rules commitment. On one hand, the credibility of debt rule reduces the inflation rate. In contrast, the incredible deficit rule policy does not have any impact on the inflation rate and therefore does not support to inflation targeting. Given those results, we conclude that credibility matters in stabilizing price levels. Accordingly, those findings suggest tightening coordination between monetary and fiscal policy to maintain fiscal sustainability in accordance with price stabilization policy
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Jang, Tae-Seok. "Economic Stabilization and Public Debt in Turkey : Implications for Monetary and Fiscal Policy in Emerging Economies." Ordo Economics Journal 18, no. 4 (December 31, 2015): 105–28. http://dx.doi.org/10.20436/oej.18.4.105.
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SHILLER, ROBERT J. "IRVING FISHER, DEBT DEFLATION, AND CRISES." Journal of the History of Economic Thought 35, no. 2 (May 10, 2013): 179–83. http://dx.doi.org/10.1017/s1053837213000059.
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This article reconsiders, in the light of the current financial turmoil, Irving Fisher’s 1911 theory of financial crises and his 1933 debt-deflation theory of Great Depressions. Particular attention is given to the role of high debt ratios, high leverage ratios, and changes in the purchasing power of money in Fisher’s analysis, and to Fisher’s compensated dollar plan to stabilize the purchasing power of money. It is argued that indexing the unit of account would accomplish Fisher’s goal of stabilization without the practical difficulties of Fisher’s compensated dollar plan.
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Al-shawarby, Sherine, and Mai El Mossallamy. "Monetary-fiscal policies interactions and optimal rules in Egypt." Review of Economics and Political Science 4, no. 2 (June 5, 2019): 138–57. http://dx.doi.org/10.1108/reps-03-2019-0033.
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Purpose This paper aims to estimate a New Keynesian small open economy dynamic stochastic general equilibrium (DSGE) model for Egypt using Bayesian techniques and data for the period FY2004/2005:Q1-FY2015/2016:Q4 to assess monetary and fiscal policy interactions and their impact on economic stabilization. Outcomes of monetary and fiscal authority commitment to policy instruments, interest rate, government spending and taxes, are evaluated using Taylor-type and optimal simple rules. Design/methodology/approach The study extends the stylized micro-founded small open economy New Keynesian DSGE model, proposed by Lubik and Schorfheide (2007), by explicitly introducing fiscal policy behavior into the model (Fragetta and Kirsanova, 2010 and Çebi, 2011). The model is calibrated using quarterly data for Egypt on key macroeconomic variables during FY2004/2005:Q1-FY2015/2016:Q4; and Bayesian methods are used in estimation. Findings The results show that monetary and fiscal policy instruments in Egypt contribute to economic stability through their effects on inflation, output and debt stock. The monetary policy Taylor rule estimates reveal that the Central Bank of Egypt (CBE) attaches significant importance to anti-inflationary policy and (to a lesser extent) to output targeting but responds weakly to nominal exchange rate variations. CBE decisions are significantly influenced by interest rate smoothing. Egyptian fiscal policy has an important role in output and government debt stabilization. Additionally, the fiscal authority chooses pro-cyclical government spending and counter-cyclical tax policies for output stabilization. Again, past values of the fiscal instruments are influential in the evolution of the future fiscal policy-making process. Originality/value A few studies have examined the interaction between monetary and fiscal policy in Egypt within a unified framework. The presented paper integrates the monetary and fiscal policy analysis within a unified dynamic general equilibrium open economy rational expectations framework. Without such a framework, it would not be easy to jointly analyze monetary and fiscal transmission mechanisms for output, inflation and debt. Also, it would be neither possible to contrast the outcome of monetary and fiscal authorities commitment to a simple Taylor instrument rule vis-à-vis optimal policy outcomes nor to assess the behavior of monetary and fiscal agents in macroeconomic stability in context of an active/passive policy decisions framework.
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Grigolia, Maia. "OUTPUT VOLATILITY IMPACTS ON FISCAL POLICY SUSTAINABILITY, CASE OF GEORGIA." Globalization and Business 4, no. 8 (December 27, 2019): 110–15. http://dx.doi.org/10.35945/gb.2019.08.013.
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EU Home(current) About Us Services Blog ვაჟა კილაძე Create Posts Title Body The article discusses how fiscal stability affects macroeconomic sustainability and whether stability means strong economic growth in Georgia.The results of the analysis conducted in the article is supported by those numerous studies which indicate that fiscal stabilization reduces output volatility. Based on the existing analysis, we can say that fiscal policy can make a significant contribution to stabilizing output. Fiscal Stability Indicator (FISCO) for Georgia has been calculated and cross-country analysis has been performed. It has been found that fiscal policy contributes more to stabilization of output in developed economies than in transitional markets and developing countries. The fiscal stabilization indicator for Georgia is 0.42 and is statistically significant, which indicates that one percentage point change in output causes 0.42 percentage point change in the total budget balance (as a share of GDP). The FISCO indicator is 0.41 for developed countries and 0.24 for transitional markets and emerging economies. Based on the correlation analysis, it has been revealed that higher fiscal stability is associated with lower output volatility. However, here also, the difference between the groups of developed and transition and developing countries is significant: in developed countries- the relationship between fiscal stabilization and output fluctuation is stronger and sharply negative than in transition and developing economies. More often, fiscal policy is used as a stabilization mechanism when the economy lags behind the desired pace of growth; And are less likely to resort to policy mechanisms when booming. Due to the proven importance of the fiscal stabilization in economic sustainability it can be concluded that the use of fiscal stabilization as a mechanism only in the «black days» can greatly worsen the sustainability of government debt, as governments appear to lack the advantage that they can reduce deficits and create fiscal buffers to better address future negative shocks in times of growth.
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Gibb, R. A., and W. Z. Michalak. "Foreign Debt in the New East-Central Europe: A Threat to European Integration?" Environment and Planning C: Government and Policy 11, no. 1 (March 1993): 69–85. http://dx.doi.org/10.1068/c110069.
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East-Central Europe (Hungary, Poland, and Czechoslovakia—ECE) is one of the least known parts of the world in English-language geography. In spite of its proximity to Western Europe and the European Community (EC) it has received a very modest amount of attention from English-speaking geographers compared with that from German-speaking and French-speaking colleagues. Studies of political and economic geography of the ECE are also hampered by the lack of appropriate methodology and theory. Some of the most important issues involved lie in the economic sphere of transition from a centrally planned economy to a market economy. In the current paper, an attempt is made to survey and evaluate the size and character of existing debt stocks owed to the West by ECE and then to assess their likely impact on the political and economic geography of Europe and the EC. It is concluded that the international financial community is making it politically difficult for the countries in the region to persist with their structural reforms and stabilization policies. The future political and economic geography of ECE and EC depends, to a large extent, on the ability of the Western financial system to respond to the long-term needs of the region.
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Auerbach, Alan J., and Maurice Obstfeld. "The Case for Open-Market Purchases in a Liquidity Trap." American Economic Review 95, no. 1 (February 1, 2005): 110–37. http://dx.doi.org/10.1257/0002828053828473.
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Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open-market operations ineffective for achieving macroeconomic stabilization goals. We show that even were this the case, there remains a powerful argument for large-scale open market operations as a fiscal policy tool. As we also demonstrate, however, this same reasoning implies that open-market operations will be beneficial for stabilization as well, even when the economy is expected to remain mired in a liquidity trap for some time. Thus, the microeconomic fiscal benefits of open-market operations in a liquidity trap go hand in hand with standard macroeconomic objectives. Motivated by Japan’s recent economic experience, we use a dynamic general-equilibrium model to assess the welfare impact of open-market operations for an economy in Japan’s predicament. We argue Japan can achieve a substantial welfare improvement through large open-market purchases of domestic government debt.
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Engwerda, Jacob, Bas van Aarle, and Tzanis Anevlavis. "Debt stabilization games in a monetary union: What are the effects of introducing eurobonds?" Journal of Macroeconomics 59 (March 2019): 78–102. http://dx.doi.org/10.1016/j.jmacro.2018.11.008.
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Wildowicz-Giegiel, Anna. "The Myth of Austerity. Empirical Evidence from the Eurozone Countries." e-Finanse 15, no. 2 (June 1, 2019): 8–19. http://dx.doi.org/10.2478/fiqf-2019-0008.
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AbstractThe paper discusses the impact of austerity policy on economic performance in the eurozone countries after the global crisis that occurred in 2007-08. The undertaken fiscal consolidation efforts to cut government expenditure and increase government taxes which begun in 2010, aimed to return sustainability in public finance as the rapid growth in sovereign debt was observed in many economies, especially in the South Europe. The implemented austerity policy under the external pressure not only amplified recession but also caused the further deterioration of public finance characterized by large deficits and increasing public debt. Based on the literature and empirical findings, the issue of austerity policy and its potential consequences on growth is examined. The research aim is to explore both advantages and disadvantages of austerity, focusing on the macroeconomic conditions which accompanied it and the impact of such policy on economic growth in the eurozone countries. The hypothesis of the negative influence of austerity on economic performance is verified on the basis of recent economic literature and conducted empirical research. Both descriptive analysis and dynamic panel regression based on two-step Generalized Method of Moments was used. Data from 2010-17 for the eurozone countries served to prove the existence of a key negative relationship between austerity policy and economic growth in economies that experienced deep great recession. The conducted analysis confirmed that austerity initiated to reduce the public debt to GDP doesn’t contribute to macroeconomic stabilization, adversely affecting potential output. Contrary to widely held opinion, this allows us to claim that austerity is not a good remedy for economies suffering from recession.
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Kudrin, A., and I. Sokolov. "Fiscal maneuver and restructuring the Russian economy." Voprosy Ekonomiki, no. 9 (September 20, 2017): 5–27. http://dx.doi.org/10.32609/0042-8736-2017-9-5-27.
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The paper discusses fiscal policy parameters for the period through 2024. The suggested way to ensure long-term fiscal stability is stabilization of both the general government revenues and expenditure in percent of GDP at levels differing by the public debt service payments, and then applying a new version of the fiscal rule. Redistribution of fiscal spending from “unproductive” to “productive” areas (primarily investment in human and physical capital) is considered as a way to boost economic growth. Possible use of additional spending on education, public health, and transport system is presented, as well as optimization of expenditures in “nonproductive” areas.
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Kouretas, Georgios P., and Athanasios P. Papadopoulos. "Special issue on monetary and fiscal policy stabilization amid a debt crisis." Journal of Economic Dynamics and Control 93 (August 2018): 1–4. http://dx.doi.org/10.1016/j.jedc.2018.03.013.
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Kawecka-Wyrzykowska, Elżbieta. "Enhanced Economic Governance in the EU: Alternative to a Political Union?" International Journal of Management and Economics 37, no. 1 (October 17, 2014): 10–35. http://dx.doi.org/10.2478/ijme-2014-0001.
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Abstract In reaction to the sharp deterioration of fiscal positions and a sovereign debt crisis in the majority of EU member states, EU leaders have been strengthening the EU economic governance framework, in particular for the eurozone member states. This has been reflected mainly through a reinforcement of the Stability and Growth Pact (SGP) within the so-called six-pack and through the recent adoption of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG). The objective of this paper is to present the main decisions taken to address intensifying problems in the EU and assess them from the point of view of stability of the eurozone. The paper argues that the recent adoption of the six-pack and of the TSCG has created a legal basis for more effective governance structure that is much stronger than previously, and closer fscal coordination among EU member states in order to ensure public fnance sustainability. The practical results will depend, however, on the political willingness of countries to accept the new rules and rigorous enforcement of those rules. Most of the new solutions continue the previous approach: stricter preventive and punishing rules, and their more rigorous application. TSCG has adopted a new element: parallel to EU rules, there should be enhanced national rules (possibly in the form of constitutional commitments) and national institutions responsible for fscal discipline. This approach implies that international rules are not strong enough for sovereign countries, which agree to be subject to democratically elected national authorities but do not want to follow decisions by “outside” institutions. In addition, reverse voting in the Council encourages for more pragmatic, economically justifed use of the modifed SGP. In view of a lack of political will to move forward into a political union, this seems the only realistic approach to ensure fscal stabilization and keep the eurozone alive in the short and medium run. Two main research methods have been applied: (a)Statistical analysis of data on changes of the public fnances in the EU member states (budgetary defcit and public debt), (b)comparative analysis of successive EU documents on strengthening economic governance and identifcation of strong and weak aspects of the new documents from the point of view of stability of the eurozone. The main conclusion is that in a situation of a lack of political will to move forward into a political union, the only realistic approach to ensure fscal stabilization and keep the eurozone alive in the short and medium term seems to be to enforce rigorously the recently adopted new commitments aiming at better fscal control of euro area members.
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MUNASINGHE, MOHAN. "Special Topic I: Structural Adjustment Policies and the Environment." Environment and Development Economics 4, no. 1 (February 1999): 9–18. http://dx.doi.org/10.1017/s1355770x99000029.
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Background to structural adjustment The oil price increases of the 1970s, the worldwide recession, and developing country debt crisis of the 1980s, led to the adoption of so-called structural adjustment policies (SAPs). These economic reform packages which included stringent monetary and fiscal measures, sought to restore conditions for growth and development by a combination of short-term ‘stabilization’ and more medium-term ‘adjustment’ policies for the macro-economy. SAPs have not always achieved their economic goals, for a variety of reasons. Of greater relevance is the fact that even where economic gains have been realized through structural adjustment, both environmental and social problems have persisted in several countries. The growing sustainable development literature is seeking to identify and remedy development strategies that lead to the unsustainable use of natural resources and the environment. One key question is whether the very economic policies being prescribed to alleviate economic problems are perhaps undermining the environmental resources and social fabric on which the long-term development of nations will ultimately depend.
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Kłysik-Uryszek, Agnieszka. "Equity Investments vs. Debt Investments – What Drives OFDI in Polish Industry." Przedsiebiorczosc i Zarzadzanie 16, no. 1 (March 1, 2015): 65–81. http://dx.doi.org/10.1515/eam-2015-0005.
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AbstractPolish economy witnessed enormous changes over the past 25 years. Systematic economic growth, increasing market openness, legal stabilization and integration with EU have substantially improved Poland’s global competitive position. That is reflected, among others, in intensified flows of long-term capital in the form of foreign direct investment (FDI). What is worth stressing, the last decade (regardless the economic crisis) brought a significant rise of investments made by Polish companies abroad (Outward FDI). It should be mentioned however, that the FDI flows are usually analyzed (in both theoretical and empirical literature) as if they consist only of equity investments, when in fact they consist also of intracompany loans. As the latter may not be driven by the same factors as equity flows, the real structure of FDI flows should be taken into consideration while evaluating the investment potential of companies. The paper examines selected issues concerning international expansion of Polish companies in the form of foreign direct investment. It provides theoretical background of the problem, explores the reasons for expansion and presents the structure of foreign direct investment by Polish industrial companies in the period 2003-2012 with regard to the equity and debt components of the flows. The study is based on the data provided by the National Bank of Poland (NBP).