This thesis consists of four essays in empirical macroeconomics. What Are the Effects of Fiscal Policy Shocks? A VAR-Based Comparative Analysis The literature using structural vector autoregressions (SVARs) to assess the effects of fiscal policy shocks strongly disagrees on the qualitative and quantitative response of key macroeconomic variables. We find that controlling for differences in specification of the reduced-form model, all identification approaches used in the literature yield similar results regarding the effects of government spending shocks, but diverging results regarding the effects of tax shocks. The Analytics of SVARs. A Unified Framework to Measure Fiscal Multipliers Does fiscal policy stimulate output? SVARs have been used to address this question, but no stylized facts have emerged. I show that different priors about the output elasticities of tax revenue and government expenditures implied by the identification schemes generate a large dispersion in the estimates of tax and spending multipliers. I estimate fiscal multipliers consistent with prior distributions of the elasticities computed by a variety of empirical strategies. I document that in the U.S. spending multipliers are larger than the tax multipliers. Computing DSGE Models with Recursive Preferences and Stochastic Volatility This paper compares solution methods for computing the equilibrium of dynamic stochastic general equilibrium models with recursive preferences and stochastic volatility. The main finding is that a third-order perturbation is competitive in terms of accuracy with Chebyshev polynomials and value function iteration, while being an order of magnitude faster to run. Business Cycle Accounting and Misspecified DSGE Models This paper investigates how insights from the literature on business cycle accounting can be used to trace out the implications of missing channels in a baseline estimated dynamic stochastic general equilibrium model used for forecast and policy analysis.

Vyriausybė gali daryti įtaką tiek bendrai šalies ekonominei politikai, tiek konkrečiai nedarbui ir infliacijai, manipuliuodama savo pajamų ir išlaidų politikomis, siekdama paveikti visuminę paklausą, taigi ir gamybos apimtį. Vyriausybės pajamų ir išlaidų politikos yra jos fiskalinės politikos instrumentai. Fiskalinė disciplina derinama prie pasirinktų šalies ūkio vystymosi krypčių ir prioritetų. Šio darbo tikslas – reaguojant į kintančią ekonominę situaciją atlikti Lietuvos fiskalinės politikos analizę, iškelti pagrindinius privalumus ir trūkumus, numatyti trūkumų pašalinimo kryptis bei pateikti prognozes ateičiai. / Fiscal policy refers to the government`s spending and taxing behaviour and generaly is devided into few categories: decisions regarding government budget policypolicies related to government purchases of goods, servicies and labour; policies regarding taxes (for instance, tax rates are controlled by the government) and expenditures; policies regarding transfer payments (such as unemployment and social security benefits, wellfare payments ant state pensions); decisions involving state debt managing and administration. Fiscal discipline is strongly affected by general state economical goals and strategy. The main goal of the work is to analyse the mechanism of Lithuanian fiscal policy, find and emphasize main qualities and imperfections, the ways to avoid regress and create personal forecasts for future according to variable economical situation.

Baigiamajame darbe analizuojamos Lietuvos ir Estijos fiskalinės politikos verslo ciklo atžvilgiu. Tiriama, kaip kito valstybių taikoma fiskalinė politika keičiantis verslo ciklo momentams ir valdančių partijų ideologijoms. Darbo tikslas: suformuoti metodiką fiskalinės politikos vertinimui verlso ciklų atžvilgiu. Pirmiausia, ištirta mokslinė fiskalinės politikos, ekonomikos augimo modelių ir valdančių partijų ideologijų teorija. Ja remiantis suformuotas modelis, paremtas Cobb-Duglas ekonomikos augimo veiksniais: darbu ir kapitalu. Sukurtu modeliu tiriama bendrojo vidaus produkto pokyčio priklausomybė nuo dirbančiųjų skaičiaus, bendrojo kapitalo formavimo ir asignavimų pasikeitimo. Tyrimo rezultatai atskleidė, kad modelis neparodo fiskalinės politikos ir verslo ciklų ryšio. Valstybės asignavimai gauti kaip statistiškai nereikšmingi bendro vidaus produkto pasikeitimui. Bendram fiskalinės politikos įvertinimui naudotas lyginamosios dinamikos metodas, kuriuo remiantis Lietuva ir Estija vykdo prociklines fiskalines politikas, nepriklausomai nuo valdančių partijų ideologijų. / In the thesis it is analysed fiscal policy of Lithuania and Estonia regarding to business cycle. There is made research how governments’ fiscal policy was changing by business cycle moments and main political parties’ ideologies. Thesis objective: create the methodic for fiscal policy evaluation regarding to business cycles. First of all, in the thesis was made fiscal policy, business cycles, and political parties ideologies theoretical analysis. After theoretical analysis was formed model, by Cobb-Douglas production function major factors: capital and work force. Model was used to find dependence between gross domestic product changes and gross capital forming, employees, government expenditure changes. Research showed that model doesn’t reveal connection between fiscal policy and business cycles. Government expenditure was detected like statistically insignificant for gross domestic product changes. Comparative model was used for general fiscal policy assessment, which showed that in Lithuania and Estonia it is used procyclical fiscal policy independently from political parties’ ideologies.

No description available.

Three Monetarist models--the Netherlands Bank Model, the Polak Model and the St. Louis Model--are critically examined in this study. A structural model has been set up for the St. Louis Model, showing some missing links and variables. The reduced-form approach should not be applied recklessly, i.e. without constructing its theoretical structural equations. Furthermore, in empirical studies, the concepts of stock and flow, and time references and time dimensions should be properly specified; failure to do so can lead to difficulties in interpretation. / The Netherlands Bank Model and the St. Louis Model have been applied to the Canadian economy from 1957 to 1974. The findings from this empirical study are, in general, favourable to the Monetarist hypothesis. The application of the Netherlands Bank Model to the Canadian economy demonstrates that the monetary impulses induce greater changes in nominal income and price level than in real income. The empirical results derived from the application of the St. Louis Model on a short-term basis support a middle ground position between Monetarists and Fiscalists: the monetary and fiscal impulses exert about the same magnitude effect (about 1.5) on economic activity in a year. On a medium-term basis, however, monetary impulses have a more lasting effect on nominal income, while the effects from the fiscal impulses disappear mainly because of the crowding-out effects.

Questions on the optimal size of government always provoke intense political debate. At the center of this is the public goods problem, where certain goods and services are “under-provided” by the market due to problems with rivalry and excludability. These goods are usually provided by the public sector and financed through taxes. Questions emerge over the optimal level of provision, as different individuals value these goods differently. This dissertation consists of two studies which address preferences for the size of government from different perspectives. The first study provides a method that can be used to estimate demand for changes in levels of public provision. Using individual level Census data on migration from 1990 and 2000, I demonstrate how preferences are revealed through migration responses. Though policy convergence precludes the estimation of optimal levels for different demographic groups, I find that balanced-budget increases in education expenditures tend to attract most demographic groups while other expenditures tend to repel most individuals. Young, college educated, relatively high-income individuals tend to be more responsive to, and therefore appear to have higher preference intensity for, fiscal changes. This is true even when controlling for their increased propensity to migrate. Evidence inconsistent with welfare migration is found, suggesting that policies intended to address the race-to-the-bottom in welfare benefits may be counterproductive. In addition, the ability of the Tiebout migration process to homogenize a jurisdiction is limited by relatively small fiscal changes among jurisdictions and similar migration responses among demographic groups. The second study empirically explores the effect of ethnic heterogeneity on government size for countries throughout the world. In the developed world, heterogeneity is found to reduce the size of budgetary government, consistent with previous studies and predictions in the literature. In the undeveloped world, however, heterogeneity is found to increase the size of non-budgetary government and may increase the overall size of government.

The International Monetary Fund (IMF) is the leading international economic crisis manager, but the effects of its loans and conditionality reach far beyond overarching macroeconomic indicators. This paper will examine the consequences of IMF fiscal policy conditions on income inequality and poverty by examining cases in Latin America, and specifically Mexico during the 1980s. The role that internal politics within borrowing countries plays is also closely examined. The paper concludes with policy recommendations for the IMF to ensure the most equitable and effective means of overcoming balance of payments crises.

The purpose of this thesis is to examine the effects of macroeconomic  indicators on the government debt of Portugal, Italy, Ireland, Greece and Spain (PIIGS), based on the data from 1990 to 2010 and employed a panel data model. The research finds that the macroeconomc conditions of the PIIGS are all deteriorated to some extent, and these deteriorations lead the accumulation of government debt. The expansionary fiscal policy is an important factor that accounts for the high debt ratio of the PIIGS. On the other hand, the discrepancy between the unified monetary policy and the separated fiscal policy obstructs the adjustment mechanism by the individual government, and leads the exchange rate and interest rate instruments not efficient.

This dissertation is divided in two sections. The first section addresses the question of the consequences of fiscal policy interventions on the economy and the second section analyzes the issue of the liquidity of European Government bonds during the recent financial crisis, the effect ofliquidity shock on these securities and consequences ofpolicy responses. The frrst chapter studies the impact of a discretionary government spending shock on economic activity and other macroeconomic variables by using an alternative two-step procedure for the identification of the govemment spending shock. The second chapter analyzes the effects of a combination of fiscal and monetary policy shocks on macroeconomic and financial variables using a Time Varying Parameters Factor Augmented VAR (TVP-FA VAR) mode!. The third chapter investigates the European market of repurchase agreements and shows that government bonds represent a key fraction of the collateral in these transactions. lt also examines the effects of a rise in haircuts on the value of govemment bonds and shows that this mechanism may represent a channel in the transmission mechanism of banking and sovereign-debt crises in the periphery of the Eurozone. Following the empirical findings of the third chapter, the last chapter proposes a DSGE model with financial frictions to assess the impact of a negative liquidity shock and the consequences ofunconventional policy.

<p>How do political leaders strategically manage fiscal policy formation to enhance their political survival? What are the implications of the fiscal mechanics of survival for theories of redistribution and democratic transition? This dissertation examines the complex relationship between political regime types and fiscal information asymmetries. I focus on budgetary policies (taxation and public spending) as major strategic tools available to the executive for co-optation and punishment of opponents. I argue that allowing some degree of contestation and transparency on the fiscal contract in electoral authoritarian regimes helps the executive identify distributive claims and co-opt the opposition. Paradoxically, in new democracies, political survival depends more on lower levels of budget transparency than existent theories would have us expect. Chapters 1 and 2 present a general formal model from which I derive the major hypotheses of the study. Second, Chapters 3, 4 and 5 use new cross-national measures of fiscal transparency and test empirically the theoretical implications. The statistical models confirm the main theoretical intuitions. Finally, Chapter 6 compares in greater detail the evolution of fiscal transparency in Morocco, Turkey and Romania between 1950 and 2000. I argue that fiscal taboos closely followed the shifting political alliance and their distributional consequences for leader's survival.</p> / Dissertation