Fiscal policy in times of crisis: macroeconomic effects of the primary surplus

Includes bibliography

Crisis y desarrollo: presente y futuro de América Latina y el Caribe. Vol 2: Desencadenamiento de la crisis y la reacción de la política económica: resultados y alternativas = Crisis and development: the present situation and future prospects of Latin America and the Caribbean. Vol. 2: Onset of the crisis and the economic policy response: effects and options

Incluye Bibliografía

Unconventional Monetary Policy and the Great Recession: Estimating the Macroeconomic Effects of a Spread Compression at the Zero Lower Bound

We explore the macroeconomic effects of a compression in the long-term bond yield spread within the context of the Great Recession of 2007–09 via a time-varying parameter structural VAR model. We identify a “pure” spread shock defined as a shock that leaves the policy rate unchanged, which allows us to characterize the macroeconomic consequences of a decline in the yield spread induced by central banks’ asset purchases within an environment in which the policy rate is constrained by the effective zero lower bound. Two key findings stand out. First, compressions in the long-term yield spread exert a powerful effect on both output growth and inflation. Second, conditional on available estimates of the impact of the Federal Reserve’s and the Bank of England’s asset purchase programs on long-term yield spreads, our counterfactual simulations suggest that U.S. and U.K. unconventional monetary policy actions have averted significant risks both of deflation and of output collapses comparable to those that took place during the Great Depression.

Political institutions and policy outcomes : effects of presidential vetoes on budget making

The article examines how the power distribution between the executive and the legislature under the Presidential system affects policy outcomes. We focus in particular on the presidential veto, both package and partial. Using a simple game theory model, we show that the presidential partial veto generally yields a result in favor of the President, but that such effects vary depending on the reversion points of the package veto and the Congress's possible use of sanctions against the President. The effects of the Presidential partial veto diminish if the reversion point meets certain conditions, or if the Congress has no power to impose sufficient sanctions on the President when the President revises the outcome ex-post. To clarify and explain the model, we present the case of budget making in the Philippines between 1994 and 2008. In the Philippines, the presidential partial veto has been bringing expenditure programs closer to the President's ideal point within what may be called the Congress's indifference curve. The Congress, however, has not always passed budget bills and from time to time has carried over the previous year's budget, in years when the budget deficit increased. This is the situation that the policy makers cannot retrieve from the reversion point.

The Effects of Ultra-Loose Monetary Policies on Inequality. Bruegel Policy Contribution Issue 2015/09, June 2015

Highlights • Low interest rates, asset purchases and other accommodative monetary policy measures tend to increase asset prices and thereby benefit the wealthier segments of society, at least in the short-term, given that asset holdings are mainly concentrated among richest households. • Such policies also support employment, economic activity, incomes and inflation, which can benefit the poor and middle-class, which have incomes more dependent on employment and which tend to spend a large share of their income on debt service. • Monetary policy should focus on its mandate, while fiscal and social policies should address widening inequalities by revising the national social redistribution systems for improved efficiency, intergenerational equity and fair burden sharing between the wealthy and poor.

Federal States, Industries and Education Level – Effects of TTIP in Germany. Policy Brief #2013/05

A purely microeconomic perspective shows that all major industries and states would benefit from a transatlantic trade and investment partnership (TTIP). The greatest manufacturing and employment effects would be seen in the electronics industry as well as metal processing. Baden-Württemberg, Bavaria and North Rhine-Westphalia would benefit most from this. Furthermore, it becomes apparent that new jobs would be created for all education groups – even for relatively unskilled workers. Their real income could increase even more than that of highly qualified workers.