“Set a Sufficiently Ambitious Budget Target and Let the Automatic Stabilizers Work”. Will it Really Work in the European Monetary Union?

Farina, Francesco; Tamborini, Roberto

doi:10.1023/b:open.0000012300.71559.9a

Cited by 18 publications

(12 citation statements)

References 15 publications

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“…The Commission's popular view that the EMU governments ought simply "let the automatic stabilizers work", the more is viable the larger the extent of anti-cyclical fiscal variables. This cannot but legitimate the great prudence, if not reluctance, of most governments towards dismantling public safety nets as is often recommended by the Commission itself (see also Farina and Tamborini (2004)). …”

Section: Us T ŷmentioning

confidence: 98%

Fiscal and Monetary Policy, Unfortunate Events, and the SGP Arithmetics Evidence from a Growth-Gaps Model

2005

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The recent revision (March 2005) of the Stability and Growth Pact (SGP) has confirmed the 3% deficit/GDP ratio as the pillar of the excessive deficits procedure envisaged by the Maastricht Treaty for member countries of the EMU. Since the deficit/GDP ceiling is still in place, research on its implications for fiscal discipline and macroeconomic stabilization has to be pushed further. We argue that the agenda largely involves empirical matters. In particular, this paper presents an econometric estimate and simulations of a macroeconomic model of Italy and Germany aimed at addressing three issues. First, monetary and fiscal rules intercations are explictly modelled and examined in dynamic setting. Second, consistently with common perception and the new formulation of the SGP, the business cycle and the responses of policy variables are cast in terms of growth gaps, not gaps in levels, with respect to potential. Third, budgetary components (primary expenditure and total tax revenue) are examined as separate fiscal rules, which allows us to track the reaction of the fiscal stance to growth shocks more precisely, to point out several pitfalls in current measures of fiscal ratios to GDP, and suggest more accurate assessment of fiscal stances. JEL Classification: E0; E6

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Section: Us T ŷmentioning

confidence: 98%

Fiscal and Monetary Policy, Unfortunate Events, and the SGP Arithmetics Evidence from a Growth-Gaps Model

2005

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“…Due to the EU budget's small size (around one percent of the EU's GDP) its redistributive capacity is very The scholarly debate on EU tax policy is mostly concerned with the internalization of negative externalities stemming from closer market integration. Thus, researchers argue in favour of tax harmonization to avoid competition between member states (Sprensen, Bacchetta, and Jullien, 2000;Goodspeed, 2002;Ganghof and Genschel, 2008) as well as a coordinated fiscal policy to stabilize the Eurozone (Wildasin, 1991;Obstfeld and Peri, 1998;Farina and Tamborini, 2004;Breuss, 2009;Bordo and Jonung, 2011;Bargain et al, 2013). Yet any common fiscal policy is thought of as means to enable national redistribution within the member states rather than achieving a stronger income equality between the member states.…”

Section: European Taxation In the Public And Academic Debatementioning

confidence: 99%

“…Economists also advocate a closer fiscal policy to stabilize the monetary union (Obstfeld and Peri, 1998;Farina and Tamborini, 2004;Bordo and Jonung, 2011). Therefore, we additionally discuss the optimal centralized income taxation for the Eurozone only.…”

Section: Sfb 597 "Staatlichkeit Im Wandel" -"Transformations Of the Smentioning

confidence: 99%

European fiscal solidarity: an EU-wide optimal income tax approach

Seelkopf

Yang

2018

IJPP

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“…For them, the SGP operates as a very powerful budget constraint pushing for the containment of public expenditures and the reduction of their structural (inelastic) elements. In the labour market, these are translated into policy interventions aiming primarily at containing wage increases (in both the public and private sectors) and reducing the generosity (size, availability and duration) of unemployment benefits (Calmfors, 2001;Farina and Tamborini, 2004;Enderlein, 2006). But they also expand to the deregulation of 27 It should be noted that these criteria hold under certain conditions.…”

Section: Fiscal Policy and Labour Marketsmentioning

confidence: 99%

Beyond the Crisis: EMU and Labour Market Reform Pressures in Good and Bad Times

Monastiriotis

Zartaloudis

2010

SSRN Journal

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There is a widespread perception among the public and policy-makers that EMU carries oneway pressures for enhanced flexibility in the labour market. We discuss the theoretical basis of this by examining four mechanisms through which the establishment of the common currency and the functioning of EMU can impact on the labour markets, both within the Eurozone and of the New Member States. We argue that the theory and empirics of the link between EMU and labour market flexibility are not conclusive, leaving room for varying degrees of, and directions for, the (de)regulation of national labour markets. This discretion is partly reflected in the experience of labour market reforms in the Eurozone. An examination of the institutional framework for employment policies in the EU further corroborates the conclusion that EMU does not restrict, but rather puts on the agenda, the active exploration of policy options aimed at strengthening the resilience and adaptability of the European economy as well as its quality, fairness and competitiveness. We argue that this is no different today, during or after the crisis, than it was 'before it all started'.

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“Set a Sufficiently Ambitious Budget Target and Let the Automatic Stabilizers Work”. Will it Really Work in the European Monetary Union?

Cited by 18 publications

References 15 publications

Fiscal and Monetary Policy, Unfortunate Events, and the SGP Arithmetics Evidence from a Growth-Gaps Model

Fiscal and Monetary Policy, Unfortunate Events, and the SGP Arithmetics Evidence from a Growth-Gaps Model

European fiscal solidarity: an EU-wide optimal income tax approach

Beyond the Crisis: EMU and Labour Market Reform Pressures in Good and Bad Times

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