Economia Politica最新文献

This paper examines the causality between expenditure and revenues for Spanish municipalities after their division in four groups according to size given by number of inhabitants. The results based on Juodis, Karavias and Sarafidis test in the period 2011–2020 indicated that the bidirectional causality between revenues and expenditure is supported for three groups of municipalities (smaller than 5,001 inhabitants, from 5,001 to 20,000 people, from 20,001 to 50,000 inhabitants). The bidirectional causality in municipalities larger than 50,000 inhabitants is checked only for taxes and expenditure at 5% significance level. Large municipalities with more than half a million inhabitants could employ revenue-enhancing policies to overcome the budget deficit, while smaller municipalities promote fiscal synchronization and realize revenues and expenditures at the same time. The policy implications of results are discussed.

This study quantifies the social welfare loss caused by market power in Peru’s regulated microfinance industry and analyzes its effect on microfinance institutions’ (MFIs) efficiency from 2003 to 2019. We estimate the efficiency-adjusted Lerner index as a measure of market power and obtain efficiency scores via cost and profit stochastic frontiers estimation using data from a wide panel of MFIs. Additionally, to analyze the effect of market power on the MFI’s efficiency, we estimate a fixed effects model with instrumental variables to correct the endogeneity problem. The results show that the welfare loss due to market power in Peru’s regulated microfinance industry has increased from 0.12% of GDP in 2003 to 0.27% in 2019. It is also found that market power positively affects Peruvian MFIs’ efficiency. Therefore, reducing market power leads to a welfare gain by lowering the social welfare loss (Harberger’s triangle) and a welfare loss due to decreased efficiency in MFIs. However, we find that reducing market power leads to a positive net effect on social welfare due to greater welfare gain than loss.

After the Great Recession and the Covid Crisis the sovereign debt sustainability has again become a major public policy issue. Since the Great Recession Olivier Blanchard (2019) has put forward the theory of a “good and bad” debt equilibrium. The good debt equilibrium is usually supported by high economic growth rates, low risk premia, and lower interest rates, being sustainable and self-stabilizing. The bad debt equilibrium is driven by a self-fulfilling prophesy where higher risk premia, higher interest rates, and sovereign debt destabilize each, as also studied empirically by Paul De Grauwe (The Aust Econ Rev 45:255–68, 2012). Reconstructing those two equilibria and the threat of debt overhang for specific EU countries, we then: first explore possible escape routes from sovereign debt threats; second, evaluate the new EU fiscal rules that constrain the deficit spending to the growth rate of potential output; and third, evaluate the possible future EU policy drift endangering the new fiscal rules. Finally we stress the need for social buffers in the EU while intending to stabilize sovereign debt.

The paper analyzes the relationship between the interest rate and the public debt-to-GDP ratio through the lens of the Classical-Keynesian approach. We focus on the value dimension as a transmission channel of monetary policy, modeling how a change in the interest rate set by the central bank affects the economy’s capital intensity and, in turn, debt ratios. We do so by developing a Stock-Flow Consistent Supermultiplier model (SFC-SM) based on a simplified Input–Output structure of production, showing that the effect of an increase in the interest rate on public debt-to-GDP ratio will depend on the impact exerted by the shock on the capital intensity through changes in relative prices. Lastly, we calibrate the model, showing the possible emergence of reverse capital deepening; past a threshold, any base rate hike produces an increase in the public debt-to-GDP ratio by decreasing the capital intensity of the economy.