Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-23T10:07:34.314Z Has data issue: false hasContentIssue false
  • English
  • Français

Fiscal policies, public deficit restraints and European stabilization

Published online by Cambridge University Press:  17 August 2016

Frédérique Bec  and
Jean-Olivier Hairault
Frédérique Bec
Affiliation:
Université de Lille II and M.A.D., Université de Paris I
Jean-Olivier Hairault
Affiliation:
Université de Lille I (CEPE) and M.A.D., Université de Paris I
Get access

Summary

The ability of fiscal policies to smooth macroeconomic fluctuations under the constraints imposed by the Maastricht Treaty is at the heart of the current policy debate in Europe. A two-country intertemporal stochastic general equilibrium model is used in order to evaluate the efficiency of fiscal policy. First, it reveals the importance of the nature of the shocks hitting European countries : asymmetrical shocks actually strengthen the national fluctuations. Then, constraints on public deficit imposed by the Maastricht Treaty limit the ability of national governements to stabilize their économies. Furthermore, they can lead the european countries to adopt pro-cyclical budget rules.

Résumé

Résumé

L’aptitude des politiques fiscales à lisser les fluctuations macroéconomiques sous les contraintes imposées par le Traité de Maastricht est au coeur du débat politique actuel en Europe. Un modèle intertemporel stochastique à deux-pays est employé dans le but d’évaluer l’efficacité des politiques fiscales. Premièrement, il révèle l’importance de la nature des chocs frappant les pays Européens : en fait, l’asymétrie des chocs renforcent les fluctuations nationales. dès lors, les contraintes sur le déficit public imposé par le Traité de Maastricht limitent l’aptitude des governements à stabiliser leurs économies. De plus, elles peuvent amener les pays européens à adopter des règles de budget pro-cycliques.

Keywords

F41H87E32F41H87E32
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 62 , Issue 3-4 , 1996 , pp. 329 - 355
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1996 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(*)

We thank A. d’Autume, C. Bruno, M. Carré, F. Collard, J.F. Jacques, F. Portier, J.M. Tallon, and especially P.Y. Hénin for helpful comments on an earlier draft. We are also indebted to the referees. We benefited by the comments of the participants to the Conference “Should we rebuilt built-in stabilisers” held in Paris, January 1996.

References

Backus, P. Kehoe and Kydland, F. [1992], International real business cycles, Journal of Political Economy, 100(4), pp. 745–775.Google Scholar
Ballabriga, F., Sebastian, M. and Vablés, J. [1995], European asymmetries, Miméo, Bank of Spain, Madrid.Google Scholar
Baxter, M. and Crucini, M. [1993], Explaining saving/investment correlation, American Economic Review, 83(3), pp. 416–436.Google Scholar
Baxter, M. and King, R. [1993], Fiscal policy in general equilibrium, American Economic Review, 83(3), pp. 315–334.Google Scholar
Begg, D., Giavazzi, F. Spaventa, L. and Wyplosz, C. [1991], Monitoring European integration: The making of monetary union, report, C.E.P.R., 1991.Google Scholar
Bensaïd, J. and Gavrel, F. [1993], Uem et coordination des politiques budgétaires, Economic et Prévision, 109(3), pp. 49–100.Google Scholar
Cantor, R. and Mark, N. [1998], The international transmission of real business cycles, International Economic Review, 29(3), pp. 493–507.Google Scholar
Carré, M., Levasseur, S. and Portier, F. [1996], Economic integration, asymétries and the desirability of EMU. miméo, MAD, University Paris I.Google Scholar
Cohen, D., and Wyplosz, C. [1989], The european monetary union: An agnostic evaluation, in IMF (éd.), Macroeconomic Policies in an Interdependent World, Washington, IMF.Google Scholar
Cohen, D., and Wyplosz, C. [1990], France and Germany in the ems: The exchange rate constraint, in Alogoslioufis, G. et alii (eds.), External Constraints on Macroeconomic Policy: The European Experience, Cambridge, Cambridge University Press.Google Scholar
Craine, R. [1975], Investment, adjustment costs, and uncertainty, International Economic Review, 16(3), pp. 648–661.Google Scholar
Frenkel, J. and Razin, A. [1987], Fiscal Policies and the World Economy, Cambridge (Mass.), MIT Press.Google Scholar
Holzmann, R., Hervé, Y. and Demmel, R. [1996], The Maastricht fiscal criteria: required but ineffective, Empirica, 23, pp. 25–58.Google Scholar
King, R., Plosser, C. and Rebelo, S. [1988], Production, growth and business cycles I, Journal of Monetary Economics, 21(2/3), pp. 196–232.Google Scholar
Kollmann, R. [1995], Fiscal policy, productivity shocks and the U.S. trade balance deficit, Working Paper n‘’ 98, Institute of Empirical Macroeconomics, Minneapolis.Google Scholar
Mendoza, E. and Tesar, L. [1995], Supply-side economics in a global economy, Working Paper n‘’ 5086, N.B.E.R., Cambridge (Mass.).Google Scholar
Van Der Ploeg, F. [1989], Fiscal aspects of monetary integration in Europe, Discussion paper n-340, C.E.P.R., London.Google Scholar
Van Der Ploeg, F. [1990], Macroeconomic policy coordination during the various phases of economic and monetary integration in Europe, in European Economy (ed), The Economics of EMU, Background Studies, pp. 136–164.Google Scholar