Fiscal Spillovers In The Euro Area
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Fiscal Spillovers In The Euro Area Letting The Data Speak
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Author : Ms.Era Dabla-Norris
language : en
Publisher: International Monetary Fund
Release Date : 2017-11-15
Fiscal Spillovers In The Euro Area Letting The Data Speak written by Ms.Era Dabla-Norris and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-11-15 with Business & Economics categories.
We estimate a panel VAR model that captures cross-country, dynamic interlinkages for 10 euro area countries using quarterly data for the period 1999-2016. Our analysis suggests that fiscal spillovers are significant and tend to be larger for countries with close trade and financial links as well, as for fiscal shocks originating from larger countries. The current account appears to be the main channel of transmission, although strong trade integration among countries in the euro area and spillback effects tend to zero-out the net trade impact in some cases. A subsample analysis shows that the effects of fiscal policy have changed over time, with larger estimated domestic multipliers and spillovers between 2011 and 2014.
Cross Country Spillovers Of Fiscal Consolidations In The Euro Area
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Author : Mr.Tigran Poghosyan
language : en
Publisher: International Monetary Fund
Release Date : 2017-06-28
Cross Country Spillovers Of Fiscal Consolidations In The Euro Area written by Mr.Tigran Poghosyan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-06-28 with Business & Economics categories.
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.
Fiscal Spillovers In The Euro Area
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Author :
language : en
Publisher:
Release Date : 2017
Fiscal Spillovers In The Euro Area written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
The fiscal consolidation measures adopted in many euro area countries over 2010-13 reduced excessive domestic fiscal imbalances, but came at the cost of short-term output losses. This simultaneous tightening of fiscal policy raised concerns that such output losses might be exacerbated by negative spillovers from other countries. This paper presents some model-based simulations for the euro area with a view to gauge the cross-country impact of the fiscal measures adopted over 2010-13. The paper finds that the output effects of the fiscal consolidation were heterogeneous across countries, reflecting the different amounts and composition of fiscal measures adopted. We find that the trade channel is able to generate sizeable cross-border fiscal spillovers in the euro area. However, once the analysis takes into account the remaining channels (e.g. monetary policy reaction, exchange rate, and risk premium) total spillovers are estimated to be relatively small. In general, when compared to the growth fallout of domestic fiscal policies, negative fiscal spillovers do not seem to have added much to the economic growth woes of vulnerable countries.
Fiscal Expenditure Spillovers In The Euro Area
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Author : Mario Alloza
language : en
Publisher:
Release Date : 2020
Fiscal Expenditure Spillovers In The Euro Area written by Mario Alloza and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
The paper describes the main transmission channels of the spillovers of national fiscal policies to other countries within the euro area and investigates their magnitude using different models. In the context of Economic and Monetary Union (EMU), fiscal spillovers are relevant for the accurate assessment of the cyclical outlook in euro area countries, as well as in the debates on a coordinated change in the euro area fiscal stance and on a euro area fiscal capacity. The paper focuses on spillovers from expenditure-based expansions by presenting two complementary exercises. The first is an empirical investigation of spillovers based on a new, long quarterly dataset for the largest euro area countries and on new estimates based on annual data for a panel of 11 euro area countries. The second uses a multi-country general equilibrium model with a rich fiscal specification and the capacity to analyse trade spillovers. Fiscal spillovers are found to be heterogeneous but generally positive among euro area countries. The reaction of interest rates to fiscal expansions is an important determinant of the magnitude of spillovers.
Fiscal Spillovers In The Euro Area
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Author : Guglielmo Maria Caporale
language : en
Publisher:
Release Date : 2011
Fiscal Spillovers In The Euro Area written by Guglielmo Maria Caporale and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Fiscal Policies In The Euro Area
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Author : Mario Alloza
language : en
Publisher:
Release Date : 2018
Fiscal Policies In The Euro Area written by Mario Alloza and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The issue of the size of fiscal spillovers in the euro area has gained prominence recently, given proposals to coordinate fiscal policies that aim at achieving an appropriate “aggregate fiscal stance”, consistent with economic and monetary policy conditions. Given the heterogeneous fiscal positions of member states, such stance would be achieved by fine-tuning policies of countries with enough fiscal space. Appealing as they are, such proposals have so far been based on limited empirical evidence. On the one hand, the literature based on calibrated/estimated general equilibrium models tends to find that fiscal spillovers within the euro area are small once all channels are considered (trade channel vs. monetary policy reaction, exchange rate, and risk premium). On the other hand, the available empirical studies hinge on pools of countries, given data limitations, and do not provide robust country-specific estimates. In our paper we revisit the issue at hand. To do so, first, we compile quarterly datasets of fiscal policy variables for the four major euro area economies (1980q1-2016q4), based on consistent and comparable criteria and sources. This rich dataset allows us to effectively exploit exclusion restrictions within a structural VAR framework to identify country-specific government spending shocks. We use these shocks to explore the dynamic effects of fiscal changes in one country on neighbor countries (spillovers), finding significant and economically-relevant effects. We document that these spillover effects are notably heterogeneous in euro area countries and are particularly powerful when the fiscal actions are based on public investment expansions. We find that trade is a key transmission mechanism in explaining our results.
Economic Spillovers Structural Reforms And Policy Coordination In The Euro Area
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Author : Bas van Aarle
language : en
Publisher: Springer Science & Business Media
Release Date : 2007-10-31
Economic Spillovers Structural Reforms And Policy Coordination In The Euro Area written by Bas van Aarle and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-10-31 with Business & Economics categories.
This book analyzes economic interdependence in the Euro Area. It offers expert estimates of the sign and size of economic spillovers. Moreover, the authors explore the impact of economic policy coordination on economic performance in the Euro Area. Among the many topics explored are the link between fiscal and monetary policies in the Euro Area and the coordination of fiscal policies and of structural reforms.
Economic Spillover And Policy Coordination In The Euro Area
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Author : Klaus Weyerstrass
language : en
Publisher:
Release Date : 2006
Economic Spillover And Policy Coordination In The Euro Area written by Klaus Weyerstrass and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with European Union countries categories.
Recoge: Executive symmary. 1. A working definition of spillover. - Part 1: Theory. - 2. A working definition of spillover. - Part 2: Empirical findings. - 3. Budgetary spillover and short-term interest rates. - 4. Budgetary spillover and long-term interest rates. - 5. Budgetary stabilisation and the level of public debt. - 6. Spillover form economic reform. - 7. Macroeconomic and welfare effects of structural and budgetary policies: spillover in the MSG3 model. - Part 3: conclusions. - 8. Summary, recommendations and future research. - Appendix. - References.
Fiscal Spillovers
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Author : Patrick Blagrave
language : en
Publisher: International Monetary Fund
Release Date : 2017-10-18
Fiscal Spillovers written by Patrick Blagrave and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-10-18 with Business & Economics categories.
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.
Fiscal Consolidations And Spillovers In The Euro Area Periphery And Core
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Author : Jan In 't Veld
language : en
Publisher:
Release Date : 2013
Fiscal Consolidations And Spillovers In The Euro Area Periphery And Core written by Jan In 't Veld and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Debts, Public categories.
"A model-based assessment of the macro-economic impact of consolidations and their spillovers in the euro area in 2011-13. This paper uses a structural multi-country model to assess the impact of fiscal consolidation measures undertaken in 2011-13 in the EA periphery and core. The simulations assume 'crisis' conditions prevailing (high share of constrained households, ZLB). The GDP effects depend crucially on the composition of the consolidation and on how quickly expectations are affected. Expenditure-based consolidations have larger impact multipliers than revenue-based consolidations. Average multipliers for domestic fiscal shocks range from 0.5 and 1, depending on the degree of openness. But spillovers of fiscal consolidations are large, with both the demand channel and the competitiveness channel adding to the negative GDP effects. Higher risk premia add further to the negative GDP effects. Spillovers from consolidations in Germany and core EA have worsened the overall economic situation. A temporary fiscal stimulus in surplus countries can boost output and help reduce their current account surpluses. The improvement in current account deficits in the periphery is however small."--Document home page.