Suchergebnisse

The framework for fiscal policy coordination in EMU has been in effect for three years.The experience gained shows that the rule-based approach provides in principle a feasible solution for policy coordination among a large number of heterogeneous countries whose joint interest is to safeguard the credibility of the common monetary policy and smooth functioning of the EMU.At the same time, the experience indicates that the current set of rules and procedures laid down in the Maastricht Treaty and Stability and Growth Pact (SGP) suffer from complexity, lack of transparency and asymmetric incentives.The paper discusses the rationale for fiscal policy coordination in the monetary union in general and emphasises the role of fiscal rules and multilateral surveillance in ensuring discipline and long-term sustainability of public finances.The paper also considers incentive problems arising from the asymmetric nature of the SGP and weak interaction between national policy-making and EU-level policy commitments.As a possible remedy, the paper proposes complementing the SGP with medium-term expenditure rules for central governments and balanced budget requirements for lower levels of government.

This paper considers the effects of fiscal policy on private consumption in a framework that encompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis.The model is built on Blanchard's stochastic model of intertemporal optimization with finitely lived consumers.As an extension to the basic framework, the model also nests various hypotheses concerning the relationship between public spending and private consumption.Empirical analyses are based on annual data from nine EU countries covering the years 1961-1994 and use the nonlinear instrumental variable GMM estimator both in country-specific and in panel estimations.The tests cannot reject the hypothesis that consumers are Ricardian except for one country. Moreover, the results suggest that in the consumers' utility functions, government consumption tends to be a complement rather than a substitute for private consumption.

This study considers the effects of fiscal policy on private consumption in a framework that encompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis.The model is built on Blanchard's stochastic model of intertemporal optimization with finitely lived consumers.As an extension to the basic framework, public consumption is explicitly incorporated in the model.The model also nests the excess sensitivity hypothesis enabling an investigation of the role of current income in consumption.The empirical analysis is based on annual data from ten EU countries covering the years 1961-1994 and uses the nonlinear instrumental variable GMM estimator both in countryspecific and panel estimations.The tests clearly reject Ricardian debt neutrality for the majority of countries in the sample.The deviations from Ricardian neutrality seem to arise from excess sensitivity of consumption to current income rather than from a finite planning horizon on the part of consumers.The results also suggest that in consumers' utility functions, government consumption and private consumption tend to be unrelated or complements rather than substitutes.

This paper considers the effects of fiscal policy on private consumption in a framework that encompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis.The model is built on Blanchard's stochastic model of intertemporal optimization with finitely lived consumers.As an extension to the basic framework public consumption is explicitly incorporated in the model.The model nests also the excess sensitivity hypothesis whereby the role of current income on consumption can be investigated.Empirical analyses are based on annual data from ten EU countries covering the years 1961-1994 and use the nonlinear instrumental variable GMM estimator both in country-specific and panel estimations.The tests reject clearly the Ricardian debt neutrality for majority of the countries in the sample.Moreover, deviations from Ricardian neutrality seem to arise from excess sensitivity of consumption to current income rather than from a finite planning horizon on the part of consumers.The results also suggest that in the consumers' utility functions, government consumption and private consumption tend to be unrelated or complements rather than substitutes.

The paper presents a theoretical model of private consumption that emcompasses both the conventional (Keynesian) view of fiscal policy and the Ricardian debt neutrality hypothesis.The effects of fiscal policy on private consumption are analyzed in an extended framework built on Blanchard's stochastic model of intertemporal optimization with finitely lived consumers, in which private consumption depends on expected lifetime wealth.The model also nests various hypotheses concerning the relationship between public spending and private consumption.Empirical analysis is based on the Finnish annual data from 1960-1995 and uses the nonlinear instrumental variable GMM estimator.The tests cannot reject the hypothesis that consumers are Ricardian.Moreover, the results suggest that in the consumers' utility functions, government consumption is a substitute for private consumption.