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Policy Area Papers on Fiscal policy

Trumponomics and Taxation Trumponomics and Taxation
World Economics, March 2018
At the end of 2017 President Trump signed into law the Tax Cuts and Jobs Act which Republican supporters argue would transform the US economy and stimulate an enduring increase in the rate of economic growth. The motivation behind the legislation appears to be the beli ... More

Sovereign Wealth Fund Investment in Economic Transformation: Toward an Institutional Framework Sovereign Wealth Fund Investment in Economic Transformation: Toward an Institutional Framework
Patrick Schena & Asim Ali, World Economics, March 2017
The prospect of prolonged lower hydrocarbon and commodity prices has forced many countries to reconsider both fiscal policy and sovereign wealth fund asset allocation to address possible liquidity needs. In order to analyze the diversity and effectiveness of public inve ... More

Measuring the Performance of Fiscal Reforms: The Case of the GCC Measuring the Performance of Fiscal Reforms: The Case of the GCC
Ahmed Hashim Alyushaa, World Economics, March 2017
Public spending has raised the welfare of citizens in the Gulf Cooperation Countries (GCC) significantly over the period 1960–2015, particularly as measured in raised average life expectancy and lowered infant mortality rates. Fiscal policy in oil-producing countries is ... More

Fiscal Policy and the Global Crisis Fiscal Policy and the Global Crisis
Graham Bird, World Economics, March 2016
Up until the global economic crisis at the end of the 2000s an eclectic approach to fiscal policy seemed to have emerged from the long-standing debates that there had been about it. This largely ruled out using fiscal policy to fine tune the economy. Instead macro polic ... More

What is Britain worth to the next generation? What is Britain worth to the next generation?
Angus Hanton, World Economics, June 2015
Government economic policy implicitly aims to build up useful reserves for future generations, or at least to not burden our children and grandchildren with unsustainable debt. Surprisingly, even though this must be an important policy objective, it is rarely discussed ... More

The Greek Economic Crisis - is the Euro to Blame? The Greek Economic Crisis - is the Euro to Blame?
Andreas Hatzigeorgiou, World Economics, September 2014
The euro has been at the centre of reporting and discussion on Greece’s economic crisis. This article analyses the build-up, outbreak and development of the crisis in Greece, with the aim to answer whether the crisis can be traced to the country’s entrance into the Euro ... More

Macroeconomic Policy in Open Economies Macroeconomic Policy in Open Economies: Why Do Economists Disagree?
Graham Bird & Graham Bird, World Economics, September 2014
The dilemma facing policymakers is how to combine the instruments they have available in the form of fiscal, monetary and exchange rate policy to achieve the targets of internal and external balance. Shortly before the global economic and financial crisis in 2008 most e ... More

When Money Matters When Money Matters: Some Policy Lessons from the Business Cycle in Spain, 1998–2013
José Luis Cendejas Bueno, Félix-Fernando Muñoz & Juan Castañeda, World Economics, June 2014
The severe financial crisis that grips Spain has multiple causes. One has been the massive and continued expansion of the money supply since Spain’s accession to the Eurozone, and the non-negligible effects of this expansion on asset prices as well as on the structure o ... More

Reserve Creation and Reserve Pooling in the International Monetary System Reserve Creation and Reserve Pooling in the International Monetary System
Dr Richhild Moessner & William A. Allen, World Economics, June 2014
The paper reviews the arrangements for meeting additional post-crisis demand for international liquidity. It distinguishes between reserve creation and reserve pooling as a basis for multilateral liquidity facilities; reserve pooling arrangements carry the risk that, in ... More

Managing a Changing World Economy Managing a Changing World Economy: Challenges and scenarios
Graham Bird, World Economics, December 2013
The world economy has been experiencing a period of great and dramatic change. In part this has been associated with the rapid emergence of China, the BRICs and other newly industrialising economies. Evolution in the world economy is quickly changing the structure of gl ... More

Strengthening the Early Warning Exercise Strengthening the Early Warning Exercise: Enhancing IMF and FSB coordination
Bessma Momani, Skylar Brooks, Michael Cockburn, Warren Clarke & Dustyn Lanz, World Economics, September 2013
Following the 2007–2008 global financial crisis, the G20 leaders tasked the International Monetary Fund (IMF) and the newly created Financial Stability Board (FSB) to jointly undertake Early Warning Exercises (EWEs) in order to identify vulnerabilities within the global ... More

The Eurozone The Eurozone: Whatever happened to convergence?
Julian Gough, World Economics, June 2013
This article examines the degree of convergence of the economies of the eurozone since the start of the single currency in 1999. Convergence, both in nominal and real forms, is measured using the coefficient of variation of several economic variables. The results sugges ... More

The Collapse of Consensus The Collapse of Consensus: The contemporary confusion over macroeconomic policy
Graham Bird, World Economics, March 2013
Consensus in macroeconomics helps policymakers formulate a coherent and logically consistent group of policies. At different times in the post-war era there has been consensus around first Keynesian and then monetarist ideas. Economic crises have frequently brought one ... More

Why Hasn’t the US Economic Stimulus Been More Effective? Why Hasn’t the US Economic Stimulus Been More Effective?: The debate on tax and expenditure multipliers
F. Gerard Adams & Byron Gangnes, World Economics, December 2010
Recently questions have been raised about the effectiveness of fiscal stimulus policies, and about whether stimulus to a recessionary economy should be in the form of tax cuts or expenditure increases. This paper evaluates alternative empirical approaches to measuring t ... More

Financial Crises and Social Spending Financial Crises and Social Spending: The impact of the 2008–2009 crisis
Maureen Lewis & Marijn Verhoeven, World Economics, December 2010
Financial crises in developing and transition countries have often proven disruptive to policies and programmes due to procyclical trends in government spending growth. Given the importance and significant proportion of public budgets devoted to education and health, cu ... More

The Euro Crisis The Euro Crisis: It isn’t just fiscal and it doesn’t just involve Greece
Clas Wihlborg, Thomas D. Willett & Nan Zhang, World Economics, December 2010
The crisis in Greece and other mainly southern Eurozone countries has been discussed primarily as a fiscal issue. Current account deficits of the same countries have received less attention in spite of the relatedness of current account and fiscal deficits. We argue tha ... More

The Unfolding Sovereign Debt Crisis The Unfolding Sovereign Debt Crisis
Bob McKee, World Economics, December 2010
After the excessive expansion of new forms of private sector credit over two decades of disinflation, a huge pyramid of global liquidity was accumulated. That sparked a boom in asset prices (stocks, bonds and real estate) way beyond anything experienced in the growth of ... More

Faulting Internationally Coordinated Fiscal Stimulus Faulting Internationally Coordinated Fiscal Stimulus
Anthony J. Makin, World Economics, September 2010
Fiscal policy has been actively deployed globally by G20 governments to counter the impact of the global financial crisis on the real sectors of their economies. This coordinated fiscal response has involved a mix of new public expenditure, including on infrastructure, ... More

Keynes in the Long Run Keynes in the Long Run
Robert Skidelsky, World Economics, December 2007
In the light of recent market volatility, this essay asks: is Keynes dead or alive? The broad conclusion is that while macroeconomic models are still used, very little survives of Keynes’s original theory. 'New Keynesians' have replaced his key concept of radical uncert ... More

Are Governments Overextended? Are Governments Overextended?: Assessing the spectrum of a government’s debts and its exposure to risk
Peter S. Heller , World Economics, December 2004
Have government debt levels reached dangerous levels? Certainly, for some countries, the data would suggest so. However, this paper will argue that for many governments, the amount of explicit debt on their balance sheets seriously understates the magnitude of their ... More

How to Reform Europe’s Fiscal Policy Framework How to Reform Europe’s Fiscal Policy Framework
Lars Calmfors & Giancarlo Corsetti, World Economics, March 2003
The current budgetary problems of some EU member states have intensified the debate on Europe’s fiscal policy framework. It is not enough to change the interpretation of the Stability and Growth Pact. More fundamental revisions of the EU Treaty are needed in order to ... More

The Growing US Fiscal Gap The Growing US Fiscal Gap
Daniel Shaviro, World Economics, December 2002
The United States has a huge long-term fiscal gap, perhaps with a present value as great as $74 trillion. The US may thus be unable to continue meeting its current spending commitments without eventually enacting huge tax increases. The tax cut enacted in 2001 may ha ... More

James Tobin, 1918–2002 James Tobin, 1918–2002
An interview with introduction by Brian Snowdon & Howard Vane
World Economics, September 2002
Professor James Tobin, who died on 11 March 2002, was possibly the most eminent of the world’s ‘Keynesian’ economists. Described by Nobel Laureate Paul Samuelson as “the archetype of a late-twentieth century American scholar”, Tobin was without doubt one of the most ... More

Is Public Spending Good for You? Is Public Spending Good for You?
Yew-Kwang Ng, World Economics, June 2001
Studies by psychologists, sociologists and economists indicate that increases in incomes beyond about US$4,000 are not related to happiness nor significantly with the objective quality-of-life indicators (which increase with scientific and technological breakthroughs at ... More