Fiscal consolidations are currently in the agenda of fiscal authorities in many countries. Using Bayesian model averaging to overcome the problem of model uncertainty, we find that growth-enhancing policies and cuts in public wages are the most appropriate ingredients for successfully reducing debt levels and budget deficits. JEL Codes: H30, H62.

We estimate the political economy determinants of budget deficit forecast errors. Since the adoption of the Stability Pact, Eurozone governments have manipulated forecasts before elections. The political orientation and the institutional design of governments also affects the quality of forecasts. JEL classifications: H62, H87, C23, C53, E62

Abstract We examine the stance of fiscal policy for 32 OECD countries from 1986 to 2023 by comparing each country-year observation signs output gap and change in cyclically adjusted budget balance. find that policies are often pro-cyclical. test possible explanations using comparative statistics observations with pro- counter-cyclical policies. Our evidence suggests rules institutional quality ...

We test whether the sharp increase in sovereign spreads of euro-area countries with respect to Germany after the explosion of the Greek crisis was due to deteriorating macroeconomic and fiscal fundamentals or to some form of financial contagion. Our analysis includes indicators of domestic and external imbalances which were mostly disregarded by previous studies, and distinguishes between inves...

This study assesses the short and long-run behaviour of long-term sovereign bond yields in OECD countries, for the period 1973-2008. We employ a dynamic panel approach to reflect financial and economic integration, and to increase the performance and accuracy of the tests. Given the existence of cross-country dependence regarding sovereign yields and its determinants, we resort to simulation an...

This paper analyzes the effects of time-consistent capital taxation on the level of capital and welfare. We find that a commitment to a zero capital tax shifts the time inconsistency problem towards labor taxes and the provision of public consumption. By comparing the worst timeconsistent policies with and without a commitment to zero capital taxes, we find that the mere existence of a capital ...