Strategic interactions between monetary and fiscal policies: a case study for the European Stability Pact.

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Editors’ introduction : the new EU enlargement.

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Debt, Deficits and Inflation on the Road to the EU: the case of Turkey.

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How would a Fixed-Exchange-Rate Regime Fit the Transition Economies? The cases of the Czech Republic, Hungary and Poland.

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the Adoption of Inflation Targeting Represented a Regime Switch? Empirical evidence from Canada, Sweden and the UK.

Since 1990, a growing number of countries have adopted inflation targeting (IT) around the world. Empirical evidence on its advantages has been mixed so far, and most assessments have been based on a control group methodology. In this paper, using a MSVAR technique, we assess the adoption of IT in three industrialised countries over time; in addition, we compare their outcomes with a non-IT country, the US. Results are manifold. First, an inflation targeting regime exists, although it does not constitute a change in monetary policy reaction. Second, this conclusion is robust on a subsample excluding the periods of high inflation and early sharp disinflation. Third, the sacrifice ratio of higher output volatility generally attributed to inflation stabilisation policies is not sensitive to the adoption of inflation targeting. Fourth, this framework is shown to be conducive to higher monetary policy leeway.Inflation targeting;MSVAR;Counterfactuals;

Wealth Effects and Public Debt in an Endogenous Growth Model. Banca d'Italia Public Finance Workshop "Fiscal Sustainability : Analytical Developments and Emerging Policy Issues", Perugia, 3-5 April 2008.

The debate on public finances’ sustainability has long focused on the conditions for the accumulation of debt. This implied that, empirically, the analyses revolved around estimations of dynamic versions of the debt accumulation equation, through unit root tests and cointegration tests between e.g. revenues and primary expenditures, or debt and deficit. Bohn (2007, Journal of Monetary Economics), has forcefully argued in favour of a stronger focus on theory. The model of this paper shows to which extent and under which conditions earlier results considering fiscal policy in an endogenous growth setting are modified if government spending is not entirely tax-financed. Therefore the model uses Barro’s (1990, Journal of Political Economy) production function and Blanchard (1985, Journal of Political Economy)-type consumers to assess fiscal sustainability and the determinants of long-run (or potential) growth, in presence of productive capital services. The main conclusion is that, provided public spending is not too high, it will be growth-enhancing. This feature does not hurt fiscal sustainability if taxes are adjusted appropriately. We also calibrate the model to show that the current level of public capital is low in France, the UK and the USA.

The fiscal theory of the price level and sluggish inflation : how important shall the wealth effect be ?.

According to the fiscal theory of the price level (FTPL), the interactions between monetary and fiscal policies with governments facing the possibility to act in a non-Ricardian manner make the general price level be fully determined. Here, depending on the expectations framework, we show to what extent the validity of the FTPL also depends on consumers being non-Ricardian. With prices driven by rational expectations, the qualitative results of the strategic interactions between policies do not depend on the Ricardian or non-Ricardian behaviour by the households. With sluggish inflation, the strong version of the FTPL does not bring to a dynamically stable economy. The economy is stable only for a weak version of the FTPL; but, this time, stability conditions depend strongly on the existence and size of the wealth effect. If inflation is sluggish, the FTPL is incompatible with Ricardian consumers.fiscal theory of the price level; public debt; fiscal policy; monetary policy; inflation rate;

Le projet de Constitution européenne et la coordination des politiques économiques

Le projet de Constitution pour l’Europe, issu des travaux de la Convention pour l’avenir de l’Europe, a été rejeté en décembre 2003 pour des raisons politiques et sans que les questions de politique économique qu’il soulève aient été discutées. Ce projet ne proposait en effet aucune réforme des politiques budgétaires dans l’UE. Par défaut, le Pacte de stabilité et de croissance en reste la pierre angulaire. Mais, non respecté, il ne dispose d’aucune crédibilité. Dans un premier temps, cet article propose un commentaire de texte sur l’organisation institutionnelle des politiques budgétaires en Europe. Puis il porte un regard critique sur le statu quo proposé par les rédacteurs du projet de Constitution. Les avantages d’une coordination des politiques budgétaires sont ensuite discutés, de même que ceux d’une meilleure articulation des politiques budgétaires et monétaire. Enfin, la règle d’or des finances publiques se voit attribuée les propriétés requises pour suppléer l’absence de coordination des politiques budgétaires dans l’UE.The Draft Constitution was rejected in December 2003 for political reasons and without any discussion on its economic policies’ contents. No reform proposal on the design of fiscal policies in the EU was even mentioned, nor reform proposal of the statutes of the ESCB. Hence, the Stability and Growth Pact remains the cornerstone of European fiscal policies. Unfortunately, not enforced, it lacks credibility. In the paper, the institutional framework of European fiscal policies is thoroughly discussed. The Draft status quo is given a critical assessment. The article then turns towards the advantages of a better coordination of economic policies, be they only fiscal or monetary and fiscal policies. Last, the “golden rule of public finances” is showed to incorporate properties which might make up for the absence of “ex ante coordination” within the EU

L’économie de la panique : faire face aux crises financières:L’économie de la panique : faire face aux crises financières

Après cinq années de crises récurrentes dans les économies émergentes, des pays asiatiques en 1997-1998 à l’Argentine en 2002, en passant par la Russie, l’ouvrage de Jérôme Sgard arrive à point pour tenter de nous aider à en comprendre, en particulier, les causes et les dynamiques, mais aussi les conséquences pour « l’architecture financière internationale ». [Premier paragraphe]Sgard, Jérôme, "L'économie de la panique : faire face aux crises financières", La Découverte, Paris, 2002, 2-7071-3836-

Macroeconomic Policy in the First Year of Euroland:Premier rapport annuel du groupe de politique macroéconomique du CEPS

L’OFCE ayant récemment publié un Rapport sur l’état de l’Union européenne, il était important que nous nous plongions dans la lecture du rapport du CEPS, même si les formes et les ambitions diffèrent d’un ouvrage à l’autre. Sur la forme, le rapport du CEPS se présente comme un document de travail et il s’adresse plus particulièrement à des lecteurs familiers du raisonnement économique et de la macroéconomie. [Premières lignes]"Macroeconomic Policy in the First Year of Euroland", Premier Rapport Annuel du Groupe de Politique Macroéconomique du CEPS (Centre for European Policy Studies, Bruxelles), 199