A Central Fiscal Stabilization Capacity for the Euro Area

Arnold, Nathaniel; Barkbu, Bergljot; Ture, H. Elif; Wang, Hou; Yao, Jiaxiong

doi:10.5089/9781484348178.006

Cited by 68 publications

(41 citation statements)

References 5 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…44 The fund would have an overall ceiling for lending backed by the EU budget of 30 bn Euro. The IMF (Arnold et al (2018)) also proposed a central fiscal stabilisation capacity (CFC) for the euro area. In their proposal, countries contribute to a "rainy-day" fund in good economic times in order to build buffers which can be used to smooth macroeconomic shocks during economic downturns.…”

Section: Fiscal Policy As a Stabilising Toolmentioning

confidence: 99%

Fiscal Policy in an Age of Secular Stagnation

Buchner

2020

Comp Econ Stud

View full text Add to dashboard Cite

An ongoing period of secular stagnation in advanced economies has brought down interest rates, growth rates and inflation. Due to the relatively larger fall in interest rates, the differential between the interest rate paid on government debt and the output growth rate (IRGD) became lower and has even turned negative in most advanced economies. In such an environment, public debt may come at much lower (or even no) cost. Thus, if this pattern remains stable, it has important implications on the role of fiscal policy. Against this background, this paper discusses relevant long-term trends in Europe and aims to explain the currently low IRGD. Furthermore, it investigates possible future IRGD paths and its consequences for fiscal policy.

show abstract

Section: Fiscal Policy As a Stabilising Toolmentioning

confidence: 99%

Fiscal Policy in an Age of Secular Stagnation

Buchner

2020

Comp Econ Stud

View full text Add to dashboard Cite

show abstract

“…A recent study by the IMF (Arnold et al, 2018) reviews a large number of proposals made by policymakers and leading economists for a European buffer fund. These include proposals for contribution-transfer schemes that reallocate funds across countries and/or across time (akin to this paper), alongside proposals for borrowinglending schemes and a dedicated budget for the euro area (which are outside the scope of this paper).…”

Section: Examplesmentioning

confidence: 99%

Mimicking a Buffer Fund for the Eurozone

Noord

2020

SSRN Journal

View full text Add to dashboard Cite

In this paper I examine how a Eurozone buffer fund could help bolster the stability of the Eurozone economy by mitigating the procyclicality of fiscal policies. Receipts from the buffer fund are assumed to be triggered by the cyclical movements in unemployment in each country. The receipts, in turn, are expected to mitigate the fiscal contractions during downturns. To quantify the extent of macroeconomic stabilisation thus achieved, the paper policies. The computations are carried out using two databases the European Commission's AMECO database and the OECD Economic Outlook database and suggest that a Eurozone buffer fund would have significant stabilisation properties.

show abstract

“…Various concrete proposals, both by policy institutions and academic experts, have been made for some central fiscal capacity (CFC) to support countries experiencing temporary or more permanent economic hardship. Besides the initiatives discussed in the Introduction, there have been pleas for a CFC from the European Fiscal Board (2017, 2018) and researchers of the IMF (Arnold et al, 2018). 11 Claeys (2017) proposes a euro-area stabilization tool of limited size to manage the aggregate fiscal stance and to provide risk-sharing against large shocks hitting individual member states.…”

Section: Literature On the Policy Debate About Eu Fiscal Instrumentsmentioning

confidence: 99%

What Kind of EU Fiscal Capacity? Evidence From a Randomized Survey Experiment in Five European Countries in Times of Corona

Beetsma

Nicoli

Ruijter³

et al. 2020

SSRN Journal

View full text Add to dashboard Cite

Based on a conjoint survey experiment we explore the support among European citizens for a European Union (EU) budgetary assistance instrument to combat adverse temporary or permanent economic shocks hitting Member States. Suitably designed, there is quite substantial support for such an EU instrument generally and across the sample countries. Support is broader when budgetary support is conditional on debt reduction in normal times and spent in specific policy areas, in particular healthcare and education. Support also increases when there is a role for the European Commission in terms of monitoring and providing guidance. However, there is little support for policy packages that terminate a program and impose a fine in the case of noncompliance. Further, there is broad acceptance of long-run redistribution towards poorer countries. Financing the assistance through a progressive tax increase is more popular than through a flat tax increase. In general, there is substantial scope for constructing assistance packages that command a majority support in all sample countries. The survey was fielded in the midst of the COVID-19 crisis, in which the prospect of a severe economic shock became realistic. However, the results of our survey are based on respondent views in a (partially) pre-political environment: respondents had the opportunity to reason and form their own opinion about the assistance package before concrete policy proposals were debated by political parties that seek the edges of polarization.

show abstract

A Central Fiscal Stabilization Capacity for the Euro Area

Cited by 68 publications

References 5 publications

Fiscal Policy in an Age of Secular Stagnation

Fiscal Policy in an Age of Secular Stagnation

Mimicking a Buffer Fund for the Eurozone

What Kind of EU Fiscal Capacity? Evidence From a Randomized Survey Experiment in Five European Countries in Times of Corona

Contact Info

Product

Resources

About