Stress testing the EU fiscal framework

Masten, Igor; Gnip, Ana Grdović

doi:10.1016/j.jfs.2016.07.011

Cited by 3 publications

(2 citation statements)

References 16 publications

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“…In the European Union, while the Stability and Growth Pact has restricted the overall indebtedness of governments, Koehler and Koenig (2015) point out that a more sophisticated mechanism is needed as long as European Commission's methodology fails to identify the correct fiscal policy stance (Masten & Gnip, 2016). In this field of critical studies, some authors have investigated the impacts of austerity on social policy spendings such as health and education.…”

Section: Resultsmentioning

confidence: 99%

Factors in the choice of fiscal governance: A systematic literature review and future research agenda

Damasceno

Gomes

2021

Financ Acc Manag

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The fiscal governance framework includes the rules and regulations that discipline the preparation, approval, and implementation of public budgets. It results from the power struggle of the actors that participate in the process of allocating public resources. Despite relevant studies published on the subject, this study aimed to provide background information on determinant factors in the choice and effects of fiscal governance framework adopted by governments in the scholarly conversation. For this, the systematic literature review method was adopted with the development of five steps: selecting a review topic, searching the literature, gathering, reading, and analyzing the scientific papers published in the last 10 years on the subject. Results show that fiscal crises and pressures and rewards of external bodies were the preponderant factors for reforms in the framework of fiscal governance adopted by governments. In another view, impacts of this framework on national public finances were investigated primarily by analysis of numerical fiscal rules.The research gaps identified indicate directions for future research.

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Section: Resultsmentioning

confidence: 99%

Factors in the choice of fiscal governance: A systematic literature review and future research agenda

Damasceno

Gomes

2021

Financ Acc Manag

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“…Marcellino and Musso [2011] and Tereanu et al [2014] document that mistakes in fiscal policy prescriptions due to the unreliability of potential output estimation can result in wrong fiscal adjustments, whose size is up to 1.5 per cent of GDP. Masten and Gnip [2016] compare the current EMU methodology to an alternative one derived from a DSGE estimation, and find that the former tend to over-estimate the role of discretionary fiscal policy. As a result, policy prescription turn out to be wrong.…”

Section: Pact (Sgp) By the Treaty On Stability Coordination And Govementioning

confidence: 99%

Potential Output and Fiscal Rules in a Monetary Union Under Asymmetric Information 2nd Ed

Marattin¹,

Meraglia²

2016

SSRN Journal

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We analyze fiscal rules within a Monetary Union in the presence of (i) asymmetric information on member states' potential output and (ii) bail-out among member states. The first-best deficit is contingent on the cycle, that is, on member states' output gap. In the presence of asymmetric information and bailout, the first-best deficit is not implementable. Bail-out lowers the scope for signalling (discrimination) by member states (lenders) and induces overborrowing by member states characterized by a low output gap. The Monetary Union can design a mechanism such that a member state with a smaller negative output gap runs an optimal budget deficit upon receiving a transfer form the Union. We show that, this 'cyclically-contingent' fiscal framework Pareto dominates the 'cyclically-adjusted ' fiscal rule currently enforced by the European Monetary Union. Our model can then account for a situation where both asymmetric information over cyclical positions and the presence of bail-out among member states does not induce borrowing distortions.

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Macro-stability and international finance

Κουρέτας

Papadopoulos

2016

Journal of Financial Stability

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Stress testing the EU fiscal framework

Cited by 3 publications

References 16 publications

Factors in the choice of fiscal governance: A systematic literature review and future research agenda

Factors in the choice of fiscal governance: A systematic literature review and future research agenda

Potential Output and Fiscal Rules in a Monetary Union Under Asymmetric Information 2nd Ed

Macro-stability and international finance

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