This paper investigates several possible reasons for the exceptional period of growth in the nineties in the US.. These years can be characterised as a case of an expansionary fiscal consolidation as strong growth and structural surpluses were observed. Five different channels, the literature suggests for relationships between government spending and consumption are investigated. There are hints that the economy did not work in a Keynesian way but there is no proof of the existence of a Non-Keynesian effect. Expectational effects could not be separated empirically from asset wealth. Whereas standard consumption estimations failed, a model adding a factor containing asset wealth and expectations was finally able to explain consumption from 1996 onwards. This has important implications for policy. Moreover, compositional effects were found to be important. The two main findings of the paper, namely an asset wealth/expectations effect and compositional effects support the interpretation of a positive link between public savings, asset values and growth. (author's abstract) / Series: Department of Economics Working Paper Series

Vyriausybės veikla reiškiasi jos vykdoma politika, kuri gali suteikti ekonominiam ciklui kilimo arba smukimo reiškinį. Naudodama fiskalinę politiką, arba kitaip iždo politiką, kuri reiškiasi mokesčiais ir biudžeto išlaidomis, gali reguliuoti valstybės ekonominę padėtį. Tai Vyiausybės įrankis, padedantis įtakoti ekonomikos veiklą per jos vykdomą išlaidų ir mokesčių kontrolę. Magistro darbe nuspręsta išanalizuoti ir įvertinti fiskalinės politikos pokyčius Lietuvai įstojus į ES, tuo pačiu palyginti su kitomis Baltijos šalimis. Šiuo magistro darbo tyrimu siekiama išsamiai ir nuosekliai, atlikti Lietuvos fiskalinės politikos analizę ir suformuluoti išvadas. Siekiant į analizę įtraukti kuo naujesnius duomenis, buvo pasirinkti laikotarpiai: Lietuvos fiskalinės politikos analizei 2004–2013 m. laikotarpis, o lyginamąjai Baltijos šalių analizei 2004–2012 m. Siekiant analizės nuoseklumo bei išvadų pagrįstumo, buvo iškelti uždaviniai: išnagrindėti fiskalinės politikos atsiradimo priežastis, tikslus, ištirti bei įvertinti pagrindines fiskalinės politikos priemones ir jų poveikį ekonomikai, ištirti Lietuvos fiskalinės politikos įgyvendinimo ypatumus bei fiskalinės politikos pokyčius, Lietuvai įstojus į ES, atlikti lyginamąją Baltijos šalių fiskalinės politos analizę po įstojimo į ES. Darbo metu nagrinėjant fiskalinės politikos sampratą, teorinį jos priemonių panaudojimą, valstybės biudžeto struktūrą ir jo sudarymo bei vykdymo procesus, buvo atlikta mokslinės literatūros analizė... [toliau žr. visą tekstą] / Government action is manifested in its policies, which may give rise to economic cycles or downward phenomenon. By using fiscal policy, otherwise exchequer policy, which is manifested fees and budget costs, it can regulate the state economic situation. This is the government tool that helps to influence economic activity through its ongoing monitoring of costs and fees. In this master's thesis was decided to analyze and assess fiscal policy in Lithuania's accession to the EU, while compared with the other Baltic countries. In this master's thesis research is aimed to comprehensively and to consistently perform a Lithuanian fiscal policy analysis and to formulate conclusions. In order to include an analysis of the most recent data were selected periods: for 2004-2013 Lithuanian fiscal policy analysis, and 2004-2012 comparative analysis of the Baltic countries. In order to analysis the consistency and validity of the conclusions was identified objectives: to examine the causes of fiscal policy objectives, to examine and evaluate the main fiscal policy measures and their impact on the economy to explore Lithuania's fiscal policy peculiarities and fiscal policy developments in Lithuania's accession to the EU, the Baltic comparative national fiscal policy analysis after accession to the EU. During the examination of the concept of fiscal policy, the theoretical instruments its uses, the structure of the state budget and the establishment and implementation processes were carried... [to full text]

The first two chapters are dedicated to the modeling and implementation of a stock-flow consistent framework that incorporates real estate as an asset in the portfolio of the household. The third chapter investigates the main determinants of mortgage repayment of Canadian households. This first chapter presents a five-sector stock-flow consistency growth model where the portfolio decision of the households includes their choice of how much real estate they are interested in holding. The primary aim of the chapter is to model the housing market using the stock-flow consistent approach to explain the current global financial problem triggered by the housing market. The model is then simulated to predict the behaviour of various variables and propose appropriate solutions to the financial problem in the hope of returning the economy to a suitable equilibrium. Households' portfolio consists of money deposits, bills, bank equities and real estate. The other sectors that interact with the household sector are the production firms, the banks, the central bank and the government. Aside from the household sector, the banking sector ends up holding some real estate equivalent to the amount of mortgages defaulted by the households. The supply of real estate from the production sector is therefore augmented by the additional ones held by the banks. The second chapter presents the implementation of the stock-flow consistency model of first chapter. The purpose of the chapter is to run a simulation of the model and experiment with shocks to determine the path of the economic variables of the model. Another objective in performing the experiments is to find policies for mitigating the housing crisis. The model is implemented using the Eviews computer modeling software and runs until a stationary steady state is achieved. Various shocks are applied to the baseline stationary state. The results of the monetary policy show that the mortgage rate shock is more effective in influencing the growth rate of the economy as well as controlling the real estate market. Government fiscal policy is also effective in regulating the housing market. A one-period temporary fiscal policy shock is even capable of generating permanent long run growth effects. Household expectations in future housing price increases or future high rates of housing returns have the effect of heating the real estate market without comparable increases in economic growth. Policy makers must keep these expectations in check. The third chapter analyzes the determinants of mortgage repayment options in Canada. With the freedom that comes with being debt-free and owning a home one will assume that households pay off their mortgages as soon as possible. However, there are factors that inhibit households from carrying out these payoffs. The study uses Canadian micro-level data to examine factors that drive households to default, prepay or continue to make regular mortgage payments. The research methodology uses multinomial (polytomous) logistic regression analyzes. The empirical results establish that the traditional mortgage related predictor variables for repayment are statistically significant with the expected signs. The results relating to the provinces are not significantly different from each other. The results did not however provide any significance in relation to mortgage rates and the number of children in the household.

This dissertation consists of five separate essays (and a short introductory chapter) that analyze the effects of debt policy on private consumption. Essay 1: Government Debt and Private Consumption: Theory and Evidence. The Ricardian equivalence theorem has been widely debated since (at least) the seventies. The theorem states that households should not change their consumption path in response to changed timing of taxes, given the path of government consumption. In this essay, theoretical models giving rise to the equivalence result as well as models predicting deviations from debt neutrality are presented. In general, the Ricardian models are based on unrealistic assumptions, such as infinite horizons, perfect capital markets and lump-sum taxes. The issue of Ricardian equivalence is thus perhaps better viewed as a question concerning to what extent the equivalence hypothesis is a reasonable approximation of the real world. This could only be established by empirical studies. To formulate a test of Ricardian equivalence, it is however vital to extend the standard analysis in deterministic models to stochastic models. In a stochastic model we need to incorporate the fact that agents have to make predictions about future levels of government consumption, and that public debt might be a useful predictor for that purpose. It is therefore necessary that an empirical study distinguishes between debt as a potential source of net wealth, which is the concern of the equivalence proposition, and debt's role as a signal of future levels of government consumption, which is due to the stochastic nature of the world. It is argued that there are few empirical studies that make this distinction, and in case the distinction is made, the evidence is in favor of the Ricardian equivalence proposition, namely that public debt is not net wealth to households. Changing the timing of taxes will therefore not change private consumption. In other words, although the Ricardian equivalence hypothesis is burdened with unrealistic assumptions, it seems (historically) to provide a reasonable approximation of actual data. Essay 2: An Investigation of Ricardian Equivalence in a Common Trends Model. A common trends model for gross national income, private consumption, government consumption and net taxes is estimated on US data. The system has two cointegrating vectors and thus two common stochastic trends, interpreted as a technology trend and a public sector trend. The two temporary shocks are interpreted as a private demand and government financing shock, respectively. Theoretical models suggest that the two cointegrating vectors could be due to the private and public sectors' intertemporal budget constraints. We find two co-integrating vectors, as predicted by no-Ponzi game constraints on the sectors. However, a stronger version of the no-Ponzi game constraint is a solvency condition, which implies particular co-integrating vectors. These cointegration vectors are both rejected for the sample period, indicating that the public sector will not be able to repay its debt if the current policy is maintained. However, the private sector is at the same time accumulating wealth, which is consistent with predictions from a Ricardian model. Further, the equivalence theorem predicts that private consumption should be unaffected by financing shocks. Data, however, indicate that there is a significant short run effect on both income and private consumption from the financing shock, but the effect indicates that increasing taxes is accompanied by increasing private consumption, contrary to both standard Ricardian and Keynesian models. In the theoretical world, this type of pattern could be generated in models with risk averse individuals and uncertainty about future taxes. Essay 3: Risky Taxes, Budget Balance Preserving Spreads and Precautionary Savings. This essay analyzes the effects on consumption from changes in the riskiness of taxes. It starts by reinterpreting the Sandmo [1970] paper on general capital income risk to the case of risky capital taxation. In his framework the concept of a mean preserving spread (MPS) is used for the risk analysis. In connection with risky taxes it is however possible to explicitly connect the tax risk with the government's budget constraint. In this essay the concept of a budget balance preserving spread (BBPS) is developed and used for the analysis of stochastic taxes. The essay is concluded with a comparison of the effects that a MPS and a BBPS has on consumption decisions. It is shown that the comparative statics results for a BBPS could be different from the results obtained with a MPS. Essay 4: Budget Deficits, Tax Risk and Consumption. This essay analyzes the effects of budget deficits on consumption when individual taxes are stochastic. It is shown that the co-movements between budget deficits and private consumption will depend on how risk averse individuals are. In the case of lump-sum taxes, it is sufficient to assume that individuals have a precautionary savings motive to obtain the result that consumption today will decrease with increased disposable income today. Furthermore, if we use a time separable iso-elastic utility funcition, the standard analysis of capital income risk predicts (precautionary) savings to increase with increased risk if the coefficient of relative risk aversion is greater than one. This is no longer sufficient when the risk is due to uncertain capital income taxes. In general, the coefficient must be greater than one to obtain precautionary savings in response to the greater risk implied by a budget deficit. The results in the paper are consistent with Ricardian equivalence only for some specific utility function, but not in general. However, in the same way, the results are consistent with standard Keynesian models that display a positive relation between debt and private consumption only for certain utility functions, and could equally well generate the opposite result for individuals that are enough risk averse or prudent, without changing the expected value of government consumption. In other words, if future taxes are uncertain, increased disposable income in the present period will decrease present consumption, if households are prudent enough. Essay 5: Budget Deficits, Stochastic Population Size and Consumption. This paper analyzes the effects on present consumption of budget deficits under different assumptions regarding demographics. In the first part, birth and death rates are deterministic, and in the second part, birth rates are assumed to be stochastic. In the case of a deterministic population size, an increase in public debt raises present consumption, if the (deterministic) birth rate is greater than zero, while with a zero birth rate we obtain debt neutrality. This is consistent with the results in Blanchard [1985] and Buiter [1988]. However, for the case of stochastic birth rates, it is shown that we can obtain the result that present consumption will decrease when public debt is increased, both when we have a zero expected birth rate, and when the expected population size is assumed to be constant, so that the expected birth rate is positive and equal to the death rate. The explanation is that with an uncertain birth rate, the future tax base is uncertain, which makes per capita taxes uncertain in the future. Shifting taxes to the future thus implies greater uncertainty about future net income, and induces precautionary savings. / Diss. Stockholm : Handelshögsk.

Thesis (doctoral)--Universität Bonn, 2003. / Includes bibliographical references.

Thesis (doctoral)--Universität Bonn, 2003. / Includes bibliographical references.

[pt] Esse artigo investiga se a fragilidade fiscal influencia a magnitude dos multiplicadores fiscais. Nós definimos estados de fragilidade fiscal baseados na literatura de determinantes político-institucionais de déficits fiscais. Utilizando dados trimestrais para 44 países, encontramos evidências de que os multiplicadores fiscais de economias em situação fiscal frágil são menores do que os multiplicadores dos países com maior fluxo esperado de geração de superávits. / [en] This paper investigates if fiscal fragility influences the magnitude of fiscal multipliers. We define states of fiscal fragility based on the literature on politico-institutional determinants of fiscal deficits. Using quarterly data for 44 countries, we find that fiscal multipliers in fiscally fragile economies are smaller than in economies expected to have greater surpluses.

Este artigo tem como objetivo verificar se há assimetria na rigidez de preços e de salários na economia brasileira; ou seja, se os agentes da economia são mais rígidos para baixo ou para cima para ajustarem seus preços e salários. Além disso, realiza-se a análise dos efeitos da política monetária e fiscal na dinâmica da economia. Para isso, utiliza-se um modelo Dinâmico Estocástico de Equilíbrio Geral (DSGE) não linear com custos de ajustamento assimétricos de preços e de salários com base no trabalho de Aruoba, Bocola e Schorfheide (2013). Esse modelo pode gerar rigidez de preços e de salários para baixo (ou para cima) que podem gerar não linearidades fortes. Diante da não linearidade gerada por esses aspectos, o modelo é solucionado através de um método de solução não linear e os seus parâmetros são estimados com a ajuda do Filtro de Partículas. O resultado encontrado é que tanto os preços quanto os salários nominais são mais rígidos para baixo e essas assimetrias na rigidez influenciam a dinâmica da economia quando esta sofre choques de política monetária e fiscal. / The objective of this article is to verify if there is asymmetry in the rigidity of prices and wages for the Brazilian economy; i.e. if the economic agents are more rigid downward or upward when adjusting their prices and wages. In addition, it performs the analysis of the effects of monetary and fiscal policy in the dynamics of the economy. For this, it uses a nonlinear model of Dynamic Stochastic General Equilibrium (DSGE) with asymmetric adjustment costs in prices and wages based on the work of Aruoba, Bocola and Schorfheide (2013). This model can generate prices and wages rigidity downward (or upward) that can produce strong nonlinearities. Considering the non-linearity generated by these aspects, the model is solved through a non-linear solution method and its parameters are estimated with the help of Particle Filter. The obtained result is that both prices and nominal wages are more rigid downwards and these asymmetries in rigidity influence the dynamics of the economy when it suffers shocks from monetary and fiscal policies.

The Great Recession is the manifestation of some fundamental problems in the real sector of the global economy, related basically to the loss of competitiveness of the U.S. and other central economies, reflected in continuous external disequilibria in the form of parallel current account deficits and financial account surpluses. Domestic monetary and fiscal (or domestic adjustment) policies have not reached a solution to the problem because we are now dealing with a global problem that requires multilateral solutions seeking to adjust some fundamental relative prices and the closing of some key structural imbalances in order to make a sustainable recovery possible. Besides, the difficulties in finding and engineering a solution show the need to reassess the theoretical paradigms underlying the economic policies that preceded the current crisis (e.g., supply-side economics). / La Gran Recesión es la manifestación de ciertos problemas fundamentales en el sector real dela economía global, relacionados básicamente con la pérdida de competitividad de los Estados Unidos y otras economías centrales, y que se han reflejado en sucesivos desequilibrios externos en la forma de paralelos déficits en cuenta corriente y superávits en cuenta financiera. Las actuales políticas de ajuste doméstico no están funcionando porque se trata de un problema global que requiere de soluciones globales que permitan el ajuste de ciertos precios relativos fundamentales y la reversión de algunos desequilibrios estructurales básicos, a fin de hacer posible una recupe- ración sostenible. Además, las dificultades para encontrar una solución muestran la necesidad de reevaluar los paradigmas teóricos que sirvieron de base a las políticas económicas previas a la crisis actual (por ejemplo, supply-side economics).

O objetivo deste trabalho é estimar a importância relativa de consumidores ricardianos e não-ricardianos na economia brasileira e analisar o impacto de choques nos gastos do governo no consumo privado utilizando um modelo dinâmico estocástico de equilíbrio geral (DSGE). Os parâmetros do modelo são estimados utilizando-se métodos de inferência Bayesiana. Conclui-se que a importância dos consumidores não-ricardianos no Brasil é baixa, próxima de 10% e que sua presença afeta os demais parâmetros do modelo. Em resposta aos choques nos gastos do governo, verifica-se que o modelo falha em conter a queda no consumo privado devido a alta persistência dos choques e que há um apertamento da política monetária visando conter o aumento da inflação. / The purpose of this dissertation is to estimate the share of ricardian and nonricardian consumers in the brazilian economy and analyze the impact of government spending shocks on private consumption using a dynamic stochastic general equilibrium (DSGE) model. The parameters of the model are estimated using bayesian methods. We conclude that the share of non-ricardian consumers in Brazil is low, around 10% and that its presence a ect the other parameters in the model. In response to the government spending shocks, we verify that the model fails to contain the reduction on private consumption due to the high persistence of the shocks. We also verify a monetary policy tightening to contain the rise in in ation caused by the shock.