The Macroeconomic Effects of the Euro Area's Fiscal Consolidation 2011-2013: A Simulation-Based Approach

Rannenberg, Ansgar; Schoder, Christian; Stráský, Jan

doi:10.2139/ssrn.3033744

Cited by 11 publications

(7 citation statements)

References 39 publications

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“…Finally, we compare the baseline multipliers to those derived from a calibration which is more suitable to characterize an economic recovery following a recession. Typically, the early phase of a recovery when output is below potential features severe liquidity constraints, bond spreads reflecting high financial market risk, and lower profitability (Rannenberg, Schoder, and Strasky 2015;Gechert, Hallett, and Rannenberg 2016). In line with that, we increase the share of rule-of-thumb households by 20%-points and the equity risk premium by 2%-points and decrease the core firms' price mark-up by 10%-points.…”

Section: Simulating the Macroeconomic Effects Of Carbon And Labor Tax Increasesmentioning

confidence: 99%

Regime-Dependent Environmental Tax Multipliers: Evidence from 75 Countries

Schoder¹

2021

Policy Research Working Papers

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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Section: Simulating the Macroeconomic Effects Of Carbon And Labor Tax Increasesmentioning

confidence: 99%

Regime-Dependent Environmental Tax Multipliers: Evidence from 75 Countries

Schoder¹

2021

Policy Research Working Papers

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“…The double dip in growth in the EA was mostly due to the coordinated fiscal consolidation among EA country members implemented from 2011 to 2013. Simulations with the European Union (EU) Commission model Quest show that fiscal policy contributed to cumulative GDP deviations from the baseline scenario that vary by country from 8 to 18 per cent, including spillover effects varying from 1 to 2 per cent (in't Veld 2013; see also Rannenberg et al 2015). Fatás/Summers (2015) illustrate how excessive consolidation leaves behind permanent effects via hysteresis and can be self-defeating, even aggravating the public-debt ratio in some cases.…”

Section: The New Role Of Fiscal Policy In Macroeconomic Stabilisationmentioning

confidence: 99%

Fiscal and financial conditions for a stronger euro area

Constâncio

2020

European Journal of Economics and Economic Policies: Intervention

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The euro is irreversible but it needs reform to address well-known design deficiencies and also new challenges. Although progress has been made, further steps are needed, the most important of which are: revision of the fiscal rules, establishing a central stabilisation capacity, and completing the banking union (especially a deposit insurance, a capital market union based around a common safe asset, and improved macroprudential policy). This article sets out the necessary reforms in these areas in detail.

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“…Several economists have described in the past the design failures of the Eurozone [1]- [7]. This part of the literature emphasized three major reasons for this phenomenon: 1) some members of the Eurozone do not meet the criteria for an optimum currency area; 2) the debility of all members to retain the rules of the Fiscal policy; and 3) the failure of the banking supervision.…”

Section: Literature Reviewmentioning

confidence: 99%

Addressing Asymmetries in the Eurozone

Papadimitriou¹,

Galanos²,

Poufinas³

2019

TEL

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Asymmetries in the Eurozone are high and the whole undertaking is at the crossroads. On one hand, one of its countries, namely Germany, seems to enjoy current account and budget surpluses, mainly as a result of a strong global demand for high quality German exports, an undervalued single currency, low interest rates, domestic wage restraint and a high domestic saving rate. On the other hand, persistent German surpluses associated with the not-as-good performance of the other economies make it harder for the Eurozone as a whole to recover. The European Union (EU) has tried to create a proper economic and banking union after the crisis. This attempt seems to have not been fully successful for some of the countries. At the same time, the attempts to impose austerity measures caused to a large extent an incremental rise inskepticismin Europe. The purpose of this paper is to record the prevailing asymmetries in the Eurozone, to estimate the priorities and the different maximization functions of the member countries and investigate alternative scenarios that can be followed. It is also to understand and possibly interpret the dilemmas of the German economic policy in depth, as it is the strongest economy in the Eurozone and hence anticipation was created that it would play the role of the steam engine-not necessarily within Europe only. The set of decisions that could have been taken is in the spotlight again especially due to the fear that at least the financial markets-if not the economies as a whole-are entering into a declining pattern again.

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The Macroeconomic Effects of the Euro Area's Fiscal Consolidation 2011-2013: A Simulation-Based Approach

Cited by 11 publications

References 39 publications

Regime-Dependent Environmental Tax Multipliers: Evidence from 75 Countries

Regime-Dependent Environmental Tax Multipliers: Evidence from 75 Countries

Fiscal and financial conditions for a stronger euro area

Addressing Asymmetries in the Eurozone

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