Cross-Country Spillovers of Fiscal Consolidations in the Euro Area PDF Download

Author: Mr.Tigran Poghosyan
Publisher: International Monetary Fund
ISBN: 1484306236
Category : Business & Economics
Languages : en
Pages : 37

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Book Description
This paper revisits the issue of cross-country spillovers from fiscal consolidations using an innovative empirical methodology. We find evidence in support of fiscal spillovers in 10 euro area countries. Fiscal consolidation in one country not only reduces domestic output (direct effect), but also the output of other member countries (indirect/spillover effect). Fiscal spillovers are larger for: (i) more closely located and economically integrated countries, and (ii) fiscal shocks originating from relatively larger countries. On average, 1 percent of GDP fiscal consolidation in 10 euro area countries reduces the combined output by 0.6 percent on impact, out of which half is driven by indirect effects from fiscal spillovers. The impact peters out and becomes insignificant over the medium-term. It is largely driven by tax measures, which have a relatively stronger effect on output compared to expenditure measures. The results are robust to alternative measures of bilateral links across countries.

Author: Mr.Giovanni Dell'Ariccia
Publisher: International Monetary Fund
ISBN: 1484359623
Category : Business & Economics
Languages : en
Pages : 54

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Book Description
This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

Author: Mr.Jeffrey R. Franks
Publisher: International Monetary Fund
ISBN: 1484338499
Category : Business & Economics
Languages : en
Pages : 47

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Book Description
We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.

Author: Mr.Nathaniel G Arnold
Publisher: International Monetary Fund
ISBN: 1484348206
Category : Business & Economics
Languages : en
Pages : 57

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Book Description
This note outlines a concrete proposal for a euro area CFC that could help smooth both country-specific and common shocks. Specifically, it proposes a macroeconomic stabilization fund financed by annual contributions from countries used to build up assets in good times and make transfers to countries in bad times, as well as a borrowing capacity in case large or persistent shocks exhaust the fund’s assets. The note also discusses several features aimed at avoiding permanent transfers between countries and making the CFC function as automatically as possible—to limit the scope for disputes over its operation—both of which are important points to make it politically acceptable.

Author: Rishi Goyal
Publisher: International Monetary Fund
ISBN: 1475569823
Category : Business & Economics
Languages : en
Pages : 31

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Book Description
The SDN elaborates the case for, and the design of, a banking union for the euro area. It discusses the benefits and costs of a banking union, presents a steady state view of the banking union, elaborates difficult transition issues, and briefly discusses broader EU issues. As such, it assesses current plans and provides advice. It is accompanied by three background technical notes that analyze in depth the various elements of the banking union: a single supervisory framework; a single resolution and common safety net; and urgent issues related to repair of weak banks in Europe.

Author: Selim Elekdag
Publisher: International Monetary Fund
ISBN: 1498393675
Category : Business & Economics
Languages : en
Pages : 45

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Book Description
Given the backdrop of pressing infrastructure needs, this paper argues that higher German public investment would not only stimulate domestic demand in the near term and reduce the current account surplus, but would also raise output over the longer-run as well as generate beneficial regional spillovers. While time-to-build delays can weaken the impact of the stimulus in the short-run, the expansionary effects of higher public investment are substantially strengthened with an accommodative monetary policy stance—as is typical during periods of economic slack. The current low-interest rate environment presents a window of opportunity to finance higher public investment at historically favorable rates.

Author: OECD
Publisher: OECD Publishing
ISBN: 9264256369
Category :
Languages : en
Pages : 78

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Book Description
This 2016 OECD Economic Survey of the Euro Area examines recent economic developments, policies and prospects. The special chapter cover: Making public finances more growth and equity-friendly.

Author: Luisa Antoniolli
Publisher: Springer
ISBN: 3319936263
Category : Political Science
Languages : en
Pages : 254

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Book Description
In light of Europe’s prolonged state of crisis, this book reassesses the challenges and prospects of the European integration process. Scholars from diverse disciplines reflect on various types of integration by analyzing political, economic and sociological variables, while also taking legal and cultural constraints into account. Readers will learn about the dilemmas and challenges of the European transformation process as well as political reforms to overcome these challenges. The book is divided into four parts, the first of which discusses the external dimension of the European Union, including a review of development aid policies and EU foreign policy. In turn, the second part focuses on institutional change and asymmetrical integration in the EU. The third part is devoted to the rise of populism and nationalism, including an analysis of the role of civil society organizations in the Brexit. In closing, the last part highlights the crisis of the Euro as a symbol of European integration and the emerging social and economic divide between countries of the North and South.

Author: Ms.Petya Koeva Brooks
Publisher: International Monetary Fund
ISBN: 1498305539
Category : Business & Economics
Languages : en
Pages : 286

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Book Description
Among member states, many structural weaknesses were exposed when economic performance declined significantly and financial markets became more discerning. This book focuses on the analytical underpinnings of real-time policy advice given to euro area policymakers during four cycles of the IMF’s annual Article IV consultations (2012–15) with euro area authorities.

Author: Patrick Blagrave
Publisher: International Monetary Fund
ISBN: 1484352416
Category : Business & Economics
Languages : en
Pages : 31

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Book Description
Are fiscal spillovers today as large as they were during the global financial crisis? How do they depend on economic and policy conditions? This note informs the debate on the cross-border impact of fiscal policy on economic activity, shedding light on the magnitude and the factors affecting transmission, such as the fiscal instruments used, cyclical positions, monetary policy conditions, and exchange rate regimes. The note assesses spillovers from five major advanced economies (France, Germany, Japan, United Kingdom, United States) on 55 advanced and emerging market economies that represent 85 percent of global output, looking at government-spending and tax revenue shocks during expansion and consolidation episodes. It finds that fiscal spillovers are economically significant in the presence of slack and/or accommodative monetary policy—and considerably smaller otherwise, which suggests that spillovers are large when domestic multipliers are also large. It also finds that spillovers from government-spending shocks are larger and more persistent than those from tax shocks and that transmission may be stronger among countries with fixed exchange rates. The evidence suggests that although spillovers from fiscal policies in the current environment may not be as large as they were during the crisis, they may still be important under certain economic circumstances.