Although government transfer is a well-known fiscal variable, it can significantly influence the overall supply of money in the economy. Beneficiaries of government transfer program will consume a portion of it while the rest is saved and these initial savings will then be amplified inside the economy through the multiplier effect. Apart from consumption and savings a portion of government transfer will return to government in the form of taxes. Here, in the first place, we intuitively calculate the contribution of government transfer on private consumption, households' savings, government tax revenue and money supply. In the next step we provide a microfoundation for our intuitive reasoning using a simple endowment economy with finitely lived households. Finally, we empirically calculate our proposed multipliers using impulse response analysis under structural panel VAR framework. Response of money supply to changes in government transfer uncovers a channel through which monetary and fiscal policy may interact. Moreover, variance decomposition of money supply indicates that a significant portion of variance in money supply can be explained in terms of government transfer under structural panel VAR framework.
{"title":"Effect of Government Transfer on Money Supply: A Closer Look into the Interaction Between Monetary and Fiscal Policy","authors":"Ahmed Mehedi Nizam","doi":"10.2139/ssrn.3912004","DOIUrl":"https://doi.org/10.2139/ssrn.3912004","url":null,"abstract":"Although government transfer is a well-known fiscal variable, it can significantly influence the overall supply of money in the economy. Beneficiaries of government transfer program will consume a portion of it while the rest is saved and these initial savings will then be amplified inside the economy through the multiplier effect. Apart from consumption and savings a portion of government transfer will return to government in the form of taxes. Here, in the first place, we intuitively calculate the contribution of government transfer on private consumption, households' savings, government tax revenue and money supply. In the next step we provide a microfoundation for our intuitive reasoning using a simple endowment economy with finitely lived households. Finally, we empirically calculate our proposed multipliers using impulse response analysis under structural panel VAR framework. Response of money supply to changes in government transfer uncovers a channel through which monetary and fiscal policy may interact. Moreover, variance decomposition of money supply indicates that a significant portion of variance in money supply can be explained in terms of government transfer under structural panel VAR framework.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"1 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"113998847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper proposes a methodology to price bonds jointly issued by a group of countries—Eurobonds in the euro-area context. We consider two types of bonds; the first is backed by several and joint guarantees (SJGs), and the second features several but not joint guarantees (SNJGs). The pricing of SJG and SNJG bonds reflects different assumptions regarding the pooling of debtors’ fiscal resources. We estimate fiscal limits for the six largest euro-area economies over 2008–2021 and deduce counterfactual Eurobond prices. For the five-year maturity, SNJG bond yield spreads would have been about three times larger than SJG ones over the estimation sample. Hence, issuing SJG bonds could result in gains at the aggregate level. Notwithstanding, our model also predicts that gains may temporarily vanish in periods of acute fiscal stress. We finally envision postissuance redistribution schemes, whereby gains stemming from the issuance of SJG bonds could be shared among participating countries; we argue that these schemes may alleviate the reduction in market discipline resulting from common bonds issuance. This paper was accepted by David Sraer, finance. Funding: This work has benefited from financial support from the Swiss National Science Foundation [Grant 182293]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4740 .
{"title":"Fiscal Limits and the Pricing of Eurobonds","authors":"Kevin Pallara, Jean-Paul Renne","doi":"10.2139/ssrn.3891358","DOIUrl":"https://doi.org/10.2139/ssrn.3891358","url":null,"abstract":"This paper proposes a methodology to price bonds jointly issued by a group of countries—Eurobonds in the euro-area context. We consider two types of bonds; the first is backed by several and joint guarantees (SJGs), and the second features several but not joint guarantees (SNJGs). The pricing of SJG and SNJG bonds reflects different assumptions regarding the pooling of debtors’ fiscal resources. We estimate fiscal limits for the six largest euro-area economies over 2008–2021 and deduce counterfactual Eurobond prices. For the five-year maturity, SNJG bond yield spreads would have been about three times larger than SJG ones over the estimation sample. Hence, issuing SJG bonds could result in gains at the aggregate level. Notwithstanding, our model also predicts that gains may temporarily vanish in periods of acute fiscal stress. We finally envision postissuance redistribution schemes, whereby gains stemming from the issuance of SJG bonds could be shared among participating countries; we argue that these schemes may alleviate the reduction in market discipline resulting from common bonds issuance. This paper was accepted by David Sraer, finance. Funding: This work has benefited from financial support from the Swiss National Science Foundation [Grant 182293]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4740 .","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"196 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122434855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-02-01DOI: 10.5089/9781513570013.001
Callum Jones, Pau Rabanal
We study the role that changes in credit and fiscal positions play in explaining current account fluctuations. Empirically, the current account declines when credit increases, and when the fiscal balance declines. We use a two-country model with financial frictions and fiscal policy to study these facts. We estimate the model using annual data for the U.S. and “a rest of the world” aggregate that includes main advanced economies. We find that about 30 percent of U.S. current account balance fluctuations are due to domestic credit shocks, while fiscal shocks explain about 14 percent. We evaluate simple macroprudential policy rules and show that they help reduce global imbalances. By taming the financial cycle, macroprudential rules that react to domestic credit conditions or to domestic house prices would have led to a smaller and less volatile U.S. current account deficit. We also show that a countercylical fiscal policy rule that stabilizes output growth reduces the level and volatility of the U.S. current account deficit.
{"title":"Credit Cycles, Fiscal Policy, and Global Imbalances","authors":"Callum Jones, Pau Rabanal","doi":"10.5089/9781513570013.001","DOIUrl":"https://doi.org/10.5089/9781513570013.001","url":null,"abstract":"We study the role that changes in credit and fiscal positions play in explaining current account fluctuations. Empirically, the current account declines when credit increases, and when the fiscal balance declines. We use a two-country model with financial frictions and fiscal policy to study these facts. We estimate the model using annual data for the U.S. and “a rest of the world” aggregate that includes main advanced economies. We find that about 30 percent of U.S. current account balance fluctuations are due to domestic credit shocks, while fiscal shocks explain about 14 percent. We evaluate simple macroprudential policy rules and show that they help reduce global imbalances. By taming the financial cycle, macroprudential rules that react to domestic credit conditions or to domestic house prices would have led to a smaller and less volatile U.S. current account deficit. We also show that a countercylical fiscal policy rule that stabilizes output growth reduces the level and volatility of the U.S. current account deficit.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"53 62 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131479518","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Does politician quality matter for policy in representative governments? I use administrative registry data on local politicians in Finland and exploit exogenous variation generated by close electoral races that shift the quality composition of local councils to show that (i) electing more high-income, incumbent, and competent politicians (defined as those who have a higher income relative to others with similar observable characteristics) improves fiscal sustainability outcomes but does not decrease the size of the public sector, and (ii) symmetrically, electing more university-educated local councilors leads to an increase in public spending without any adverse effects on fiscal sustainability. To reconcile these findings, I combine the micro-data on electoral candidates with unique survey data on their policy positions. Politician qualities are differentially associated with economic ideology, and these correlations tally with the policy effects.
{"title":"Politician Quality, Fiscal Policy and Ideology","authors":"Jaakko Meriläinen","doi":"10.2139/ssrn.3741701","DOIUrl":"https://doi.org/10.2139/ssrn.3741701","url":null,"abstract":"Does politician quality matter for policy in representative governments? I use administrative registry data on local politicians in Finland and exploit exogenous variation generated by close electoral races that shift the quality composition of local councils to show that (i) electing more high-income, incumbent, and competent politicians (defined as those who have a higher income relative to others with similar observable characteristics) improves fiscal sustainability outcomes but does not decrease the size of the public sector, and (ii) symmetrically, electing more university-educated local councilors leads to an increase in public spending without any adverse effects on fiscal sustainability. To reconcile these findings, I combine the micro-data on electoral candidates with unique survey data on their policy positions. Politician qualities are differentially associated with economic ideology, and these correlations tally with the policy effects.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127502755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research exploits novel evidence on current and historical inequality dynamics, as well as an instrumental variable (IV) strategy (founded on historical settler mortality à la Acemoglu et al.), to document the fundamental role of income redistribution through taxes and transfers in accounting for differences in inequality across regions and historical periods. This research challenges the conventional wisdom about the origins of world-leading inequality levels in Latin America, India, or Africa, arguing that inequality is not rooted in the colonial period nor are current inequality levels explained by supposedly persistent “extractive” economic institutions maintaining an unequal playing field. De facto, Latin America, Africa, and India have had, in most cases, lower inequality levels than Western countries (i.e. Western Europe and its Offshoots) until the early 20th century. Before this period, no different than in colonized nations, Western countries had a regressive fiscal system which required the poorest taxpayers to fund public services that benefited richer households. The IV strategy, and the evidence on inequality dynamics, both indicate that contemporary inequality differences are a product of the 20th century. The emergence of redistributive policies due to democratization, which have taken place in the past century, have led to an exceptional inequality reduction in Western countries. Despite that Latin America and India have converged towards “inclusive” economic institutions, high inequality has persisted through a regressive fiscal equilibrium (tied to a limited state capacity) which still is largely in place due to a slower democratization process.
本研究利用了当前和历史不平等动态的新证据，以及工具变量(IV)策略(基于历史定居者死亡率(la Acemoglu et al.))，记录了通过税收和转移支付在解释不同地区和历史时期不平等差异方面的收入再分配的基本作用。这项研究挑战了关于拉丁美洲、印度或非洲世界领先的不平等水平起源的传统智慧，认为不平等并非植根于殖民时期，也不是目前的不平等水平可以解释为维持不平等竞争环境的所谓持续的“掠夺性”经济制度。事实上，在大多数情况下，直到20世纪初，拉丁美洲、非洲和印度的不平等程度都低于西方国家(即西欧及其分支)。在此之前，西方国家与殖民国家没有什么不同，它们的财政制度是递减的，要求最贫穷的纳税人为有利于富裕家庭的公共服务提供资金。第四战略和关于不平等动态的证据都表明，当代的不平等差异是20世纪的产物。在过去的一个世纪里，由于民主化而出现的再分配政策，导致西方国家的不平等现象显著减少。尽管拉丁美洲和印度已经向“包容性”经济制度靠拢，但由于民主化进程较慢，高度不平等一直存在于一种倒退的财政平衡(与有限的国家能力挂钩)中。
{"title":"The Fiscal Origins of Comparative Inequality Levels: An Empirical and Historical Investigation","authors":"Andrés Irarrázaval G.H.","doi":"10.2139/ssrn.3789049","DOIUrl":"https://doi.org/10.2139/ssrn.3789049","url":null,"abstract":"This research exploits novel evidence on current and historical inequality dynamics, as well as an instrumental variable (IV) strategy (founded on historical settler mortality à la Acemoglu et al.), to document the fundamental role of income redistribution through taxes and transfers in accounting for differences in inequality across regions and historical periods. This research challenges the conventional wisdom about the origins of world-leading inequality levels in Latin America, India, or Africa, arguing that inequality is not rooted in the colonial period nor are current inequality levels explained by supposedly persistent “extractive” economic institutions maintaining an unequal playing field. De facto, Latin America, Africa, and India have had, in most cases, lower inequality levels than Western countries (i.e. Western Europe and its Offshoots) until the early 20th century. Before this period, no different than in colonized nations, Western countries had a regressive fiscal system which required the poorest taxpayers to fund public services that benefited richer households. The IV strategy, and the evidence on inequality dynamics, both indicate that contemporary inequality differences are a product of the 20th century. The emergence of redistributive policies due to democratization, which have taken place in the past century, have led to an exceptional inequality reduction in Western countries. Despite that Latin America and India have converged towards “inclusive” economic institutions, high inequality has persisted through a regressive fiscal equilibrium (tied to a limited state capacity) which still is largely in place due to a slower democratization process.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131565826","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Florin O. Bilbiie, Tommaso Monacelli, Roberto Perotti
We discuss the main fiscal policy issues in the Eurozone. Our goal is pedagogical: we do not make any new proposal, but try to represent fairly the various sides of the debate. We focus on two issues that are at the core of the current debate. The first is that, right from the start, the government deficit and debt were the key objects of contention in the debate that led to the creation of the Eurozone - and they still are, although the reasons have changed. The second, obvious issue is that a currency union implies the loss of a country-specific instrument, a national monetary policy. This puts a higher burden on fiscal policy as a tool to counteract shocks., a burden that might be even heavier now that the European Central Bank has arguably reached the Zero Lower Bound. Two obvious solutions are mutual insurance between countries; and a centralized stabilization policy. Yet both have been remarkably difficult to come by. We argue that the main reason is fear of persistent, unidirectional transfers between countries, an issue that largely reflects a Northern vs. Southern Europe divide.
{"title":"Fiscal Policy in Europe: A Helicopter View","authors":"Florin O. Bilbiie, Tommaso Monacelli, Roberto Perotti","doi":"10.3386/w28117","DOIUrl":"https://doi.org/10.3386/w28117","url":null,"abstract":"We discuss the main fiscal policy issues in the Eurozone. Our goal is pedagogical: we do not make any new proposal, but try to represent fairly the various sides of the debate. We focus on two issues that are at the core of the current debate. The first is that, right from the start, the government deficit and debt were the key objects of contention in the debate that led to the creation of the Eurozone - and they still are, although the reasons have changed. The second, obvious issue is that a currency union implies the loss of a country-specific instrument, a national monetary policy. This puts a higher burden on fiscal policy as a tool to counteract shocks., a burden that might be even heavier now that the European Central Bank has arguably reached the Zero Lower Bound. Two obvious solutions are mutual insurance between countries; and a centralized stabilization policy. Yet both have been remarkably difficult to come by. We argue that the main reason is fear of persistent, unidirectional transfers between countries, an issue that largely reflects a Northern vs. Southern Europe divide.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124819896","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The "Great Lockdown" implemented in response to the COVID-19 pandemic has led to a severe world-wide economic crisis. In euro area countries, sovereign debt-to-GDP ratios are on the rise and reductions in expected fiscal surpluses raise sustainability concerns amongst investors. This paper provides novel estimates of non-linear state-dependent fiscal limits based on Bi (2012) for the five largest euro area countries. Within the DSGE model I build a COVID-19 scenario calibrated to match the decline in real GDP growth forecasts between April and February 2020 and the fiscal stimulus packages announced up to the end of March 2020. On average, fiscal space contracts by 58.4 percent of national GDP. In a worst-case scenario fiscal space is 28.6 percent for Italy and 65.9 percent of national GDP for Germany.
{"title":"Fiscal Sustainability during the COVID-19 Pandemic","authors":"P. Hürtgen","doi":"10.2139/ssrn.3627373","DOIUrl":"https://doi.org/10.2139/ssrn.3627373","url":null,"abstract":"The \"Great Lockdown\" implemented in response to the COVID-19 pandemic has led to a severe world-wide economic crisis. In euro area countries, sovereign debt-to-GDP ratios are on the rise and reductions in expected fiscal surpluses raise sustainability concerns amongst investors. This paper provides novel estimates of non-linear state-dependent fiscal limits based on Bi (2012) for the five largest euro area countries. Within the DSGE model I build a COVID-19 scenario calibrated to match the decline in real GDP growth forecasts between April and February 2020 and the fiscal stimulus packages announced up to the end of March 2020. On average, fiscal space contracts by 58.4 percent of national GDP. In a worst-case scenario fiscal space is 28.6 percent for Italy and 65.9 percent of national GDP for Germany.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"16 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125783024","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A DSGE (Dynamic Stochastic General Equilibrium) model is used to report the empirical behavior of the Argentine economy during the administration of the Cambiemos government coalition. Two main aspects have been taken into account: on the one hand, the debate on the economic policy of the 2016-2019 period, and on the other hand the requirement of microeconomic foundations that support the debate and the empirical results. Two alternative macro models are estimated obtaining statistically significant parameters to illuminate confusing aspects of the policy debate, and to help future research on modeling Argentina macro dynamics. The empirical results obtained for Argentina indicate that the small open economy models used in the state-space specification can also be useful for modeling other small open economies that suffer from Fiscal Dominance.
{"title":"Comparative Dynamics with Fiscal Dominance. Empirical Evidence from Argentina 2016-2019","authors":"R. Fernandez","doi":"10.2139/ssrn.3631220","DOIUrl":"https://doi.org/10.2139/ssrn.3631220","url":null,"abstract":"<br>A DSGE (Dynamic Stochastic General Equilibrium) model is used to report the empirical behavior of the Argentine economy during the administration of the Cambiemos government coalition. Two main aspects have been taken into account: on the one hand, the debate on the economic policy of the 2016-2019 period, and on the other hand the requirement of microeconomic foundations that support the debate and the empirical results. Two alternative macro models are estimated obtaining statistically significant parameters to illuminate confusing aspects of the policy debate, and to help future research on modeling Argentina macro dynamics. The empirical results obtained for Argentina indicate that the small open economy models used in the state-space specification can also be useful for modeling other small open economies that suffer from Fiscal Dominance.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127430880","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this contribution, we assess the main measures, already taken or currently contemplated by the EU, in reaction to the COVID-19 crisis to mitigate its impact on Eurozone economies. The discussion begins with the recent monetary policy decisions taken by the ECB (1). The focus then shifts to the strategy deployed on the economic and fiscal side. We analyze (2) the coordination of national fiscal responses and their accommodation under the rules of the Stability and Growth Pact, (3) the role of the European Stability Mechanism, and (4) joint debt instruments.
在这份报告中，我们评估了欧盟为缓解新冠肺炎危机对欧元区经济体的影响而已经采取或正在考虑采取的主要措施。讨论从欧洲央行最近采取的货币政策决定开始(1)。然后焦点转移到经济和财政方面部署的战略。我们分析了(2)根据《稳定与增长公约》(Stability and Growth Pact)的规则，各国财政应对措施的协调及其适应性;(3)欧洲稳定机制的作用;(4)联合债务工具。
{"title":"The EU Fiscal, Economic and Monetary Policy Response to the COVID-19 Crisis","authors":"P. Dermine, Menelaos Markakis","doi":"10.2139/ssrn.3563299","DOIUrl":"https://doi.org/10.2139/ssrn.3563299","url":null,"abstract":"In this contribution, we assess the main measures, already taken or currently contemplated by the EU, in reaction to the COVID-19 crisis to mitigate its impact on Eurozone economies. The discussion begins with the recent monetary policy decisions taken by the ECB (1). The focus then shifts to the strategy deployed on the economic and fiscal side. We analyze (2) the coordination of national fiscal responses and their accommodation under the rules of the Stability and Growth Pact, (3) the role of the European Stability Mechanism, and (4) joint debt instruments.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"481 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133029015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper estimates, using Bayesian and global VARs, the spillover effects of unconventional fiscal and monetary policies implemented in the United States and in the Eurozone during the last decade. Consumer confidence and investor sentiment indicators are introduced in the models in order to highlight the signalling channel in the responses to economic policy innovations in times of crisis. Our results reveal that consumer and investor perceptions of innovative economic measures are relevant to study the pass‐through of economic policies to the real sector in times of crisis and zero lower bound interest rates. In particular, the signalling channel plays an important role in successful unconventional economic policies. Moreover, if unconventional economic policies have an impact abroad, the effects are similar to those measured in the domestic country/region. Consequently, coordination and transparency are a prerequisite for ensuring short‐term growth after a global financial crisis.
{"title":"Unconventional Economic Policies and Sentiment: An International Assessment","authors":"Marie‐Hélène Gagnon, Céline Gimet","doi":"10.2139/ssrn.3190964","DOIUrl":"https://doi.org/10.2139/ssrn.3190964","url":null,"abstract":"This paper estimates, using Bayesian and global VARs, the spillover effects of unconventional fiscal and monetary policies implemented in the United States and in the Eurozone during the last decade. Consumer confidence and investor sentiment indicators are introduced in the models in order to highlight the signalling channel in the responses to economic policy innovations in times of crisis. Our results reveal that consumer and investor perceptions of innovative economic measures are relevant to study the pass‐through of economic policies to the real sector in times of crisis and zero lower bound interest rates. In particular, the signalling channel plays an important role in successful unconventional economic policies. Moreover, if unconventional economic policies have an impact abroad, the effects are similar to those measured in the domestic country/region. Consequently, coordination and transparency are a prerequisite for ensuring short‐term growth after a global financial crisis.","PeriodicalId":339736,"journal":{"name":"PSN: Other Fiscal Policy (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126689065","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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