Imperfect credibility of the band and risk premia in the European Monetary System

Estimation;Depreciation;Franc;EMS;Deutschmark;Lira

Servicing the public debt: Comment

National Debt

The political economy of a changing population

In the context of an overlapping generations model with intragenerational inequality and majority voting, I study how the taxation of the old and retired generation is affected when the population growth rate changes. A fall in the birth rate leads to two opposite effects. On the one hand, the old generation acquires more political power because their relative size in the voting population increases. This exerts downward pressure on the taxation of the old. On the other hand, the tax burden on the young (used to repay the public debt held by the old) increases, so that their support for a low tax rate on assets held by the old decreases. In general, the number of equilibria is either zero or two, one of which involves zero taxation while the other involves partial taxation of the assets held by the old.Macroeconomic Models;Taxation;Population Dynamics;Voting;Ageing;macroeconomics

The Budgeting and Economic Consequences of Ageing in The Netherlands

The costs of population ageing are primarily reflected in larger expenditures on pensions and health care. This paper explores the consequences of ageing for the Netherlands in a baseline scenario simulated with a dynamic general equilibrium model. We discuss the sensitivity of the results under alternative projections for population ageing. We explore also the effects of three types of social security reform: a reduction in benefits, an increase in the retirement age and smoothing of the public pension premium over time. We find that the welfare effects of ageing and the reforms are substantial.

Bands and statistical properties of EMS exchange rates: A Monte Carlo investigation of three target zone model

Models;EMS

Bands and statistical properties of EMS exchange rates

EMS

Inflation versus taxation: Representative democracy and party nominations

Public Finance;Taxation;Inflation

The optimality of a monetary union without a fiscal union

EMS;fiscal policy;moral hazard

Implementing the stability and growth pact: enforcement and procedural flexibility

The paper proposes a theoretical analysis illustrating some key policy trade-offs involved in the implementation of a rules-based fiscal framework reminiscent of the Stability and Growth Pact (SGP). The analysis offers some insights on the current debate about the SGP. Specifically, greater "procedural" flexibility in the implementation of existing rules may improve welfare, thus increasing the Pact’s political acceptability. Here, procedural flexibility designates the enforcer’s room to apply well-informed judgment on the basis of underlying policies and to set a consolidation path that does not discourage high-quality policy measures. Yet budgetary opaqueness may hinder the qualitative assessment of fiscal policy, possibly destroying the case for flexibility. Also, improved budget monitoring and greater transparency increase the benefits from greater procedural flexibility. Overall, we establish that a fiscal pact based on a simple deficit rule with conditional procedural flexibility can simultaneously contain excessive deficits, lower unproductive spending and increase high-quality outlays. JEL Classification: E62, H6deficits, fiscal rules, procedural flexibility, Stability and Growth Pact, structural reforms