This study investigates the dynamics of fiscal policy and economic stabilization using a panel dataset from Sub-Saharan Africa (SSA) sourced World Development Indicators (WDI) between 1985 2019. The utilized vector error correction model (VECM) rather than autoregression (PVAR) after ascertaining presence cointegrating equations (existence long-run relationships). Also, both homogenous heteroge...

this paper, i have focused on the tax side of the fiscal policy to  investigate the past and future behavior of fiscal sustainability in iran. to do so, i have employed two different forward-looking and backward-looking approaches. first, the backward-looking approach is the fiscal policy rule proposed by daving & leeper (2011). precisely, this rule determines that whether the fiscal policy is ...

The divergences developed within the euro area represent the main threat to the existence of the single currency and to the stability of the EU as a whole. Without proper automatic stabilisers, a monetary union can only deliver suboptimal results and may not even be sustainable. In the recent years, common unemployment insurance has been examined as one of the possible ways to improve the funct...

Social Protection as an Automatic Stabilizer This paper analyzes the effectiveness of social protection systems in Europe and the US to provide (income) insurance against macro level shocks in terms of automatic stabilizers. We find that automatic stabilizers absorb 38% of a proportional income shock and 47% of an idiosyncratic unemployment shock in Europe, compared to 32% and 34% in the US. Th...

When real balances have even a very small productive role, contemporaneous and forwardlooking Taylor-Wicksell rules can induce ubiquitous multiplicities of equilibria and lead to consequences that are unintended by policymakers. This raises the issue of whether it is possible to anchor and stabilize the economy through backward-looking rules. We show that the standard uniqueness results that ar...

This article examines exchange rate-based stabilization in an economy that has been badly destroyed by war or other calamities. The article does this in the context of post-civil war Lebanon. Both Iraq and Afghanistan are prime candidates for such a policy. This article first demonstrates the validity of the theory and empirical regularities (initial boom followed by an economic contraction) in...

We describe a simple mechanism that generates inflation persistence in a standard sticky-price model of optimal fiscal and monetary policy. Key to this mechanism is that policies are implemented under discretion. The government’s discretionary incentive to erode the real value of nominal public debt by means of surprise inflation renders inflation expectations and, in further consequence, equil...

A growing empirical and theoretical literature argues in favor of specifying monetary policy in the form of Taylor-type interest rate feedback rules. That is, rules whereby the nominal interest rate is set as an increasing function of inflation with a slope greater than one around an intended inflation target. This paper shows that because of the zero bound on nominal interest rates, such rules...

Faced with real and nominal shocks, what should a benevolent central bank do, fix the money growth rate or target the inflation rate? In this paper, we make a first attempt at studying the optimal choice of monetary policy instruments in a micro-founded model of money. Specifically, we produce an overlapping generations economy in which limited communication and stochastic relocation creates an...