Due to the complex nature of fiscal policy decisions and implementations, fiscal vector autoregressive models have suffered from an underidentification problem that has caused substantial debate about measuring the efficacy of fiscal stimulus. To help resolve this issue this paper incorporates additional information regarding how private agents’ anticipation of fiscal adjustment in the short an...

Governments use national debt and the budget deficit as measures of fiscal position. But what should government policy aim to achieve with respect to these measures? Are these the right summary measures at which to be looking? This paper considers what the government should use as its fiscal targets to achieve policies that are consistent with long-term fiscal objectives. Among its findings are...

With the continued growth in demand for mineral resources and China's efforts in increasing investment in geological prospecting, fiscal investment in geological exploration becomes a research hotspot. This paper examines the yearly relationship among fiscal investment in geological exploration of the current term, that of the last term and prices of mining rights over the period 1999-2009. Hin...

This paper explores the implications of the political economy model of Battaglini and Coate (2008) for the behavior of fiscal policy over the business cycle. The model predicts that fiscal policy is counter-cyclical with debt increasing in recessions and decreasing in booms. Public spending increases in booms and decreases during recessions, while tax rates decrease during booms and increase in...

The paper examines the political business cycles theory in the case of Croatia. The paper is structured in two parts: an overview of theoretical background and an empirical analysis of opportunistic political cycles in Croatia. The first part presents a detailed insight into different political business cycle models, while the second part tests econometrically whether fiscal policy cycles exist...

We study the cyclical behavior of fiscal policy to explain why some countries exhibit pro-cyclical fiscal policy stances–being expansionary in good times and contractionary in bad times. We develop a model that links the polarization of preferences over fiscal spending to the pro-cyclicality bias. We then present evidence that social polarization as measured by income inequality and educational...

We study discretionary non-cooperative monetary and fiscal policy stabilization in the New Keynesian model, where the fiscal authority uses distortionary taxes as policy instrument. We explicitly model different frequencies of fiscal and monetary policy operations. We find that standard models of monetary and fiscal policy interactions may substantially overestimate the social gain from the sta...

This paper studies the experiences with fiscal adjustments in the European Union (EU) countries during the transition period to the Economic and Monetary Union (EMU). Using several approaches suggested in the literature on fiscal adjustments and their macroeconomic effects and in the literature on EMU, we analyze the effects of the fiscal adjustments during this period on private consumption. T...

This paper analyses fiscal autonomy in Germany. First, it provides an overview of fiscal autonomy. What is novel in this paper compared to previous studies is the development of a fiscal autonomy coefficient for the states, based on communal data. The basic intention in the empirical part is to analyse how fiscal autonomy affects the tax morale, defined as the intrinsic motivation to pay taxes,...