The Transitional Dynamics of Fiscal Policy in Small Open Economies

The paper studies the dynamic macroeconomic effects of fiscal shocks of various duration (permanent and temporary) under different financing methods (lump-sum tax and government debt). To this end, we develop an intertemporal macroeconomic model for a small open economy, featuring monopolistic competition in the intermediate goods market, endogenous (intertemporal) labor supply, and finitely lived households. Endogenous labor supply is crucial in generating cyclical adjustment paths and yields faster convergence to the new steady state compared with exogenous labor supply. The quantitative output effects and transitional dynamics of fiscal policy differ substantially from those of an infinitely lived representative agent model. In addition, government debt is key in making the timing of shocks matter, thus yielding permanent output effects of temporary fiscal shocks.fiscal policy, output multipliers, Blanchard-Yaari overlapping generations, monopolistic competition, small open economy

Fiscal Policy, Monopolistic Competition, and Finite Lives

The paper studies the short-run, transitional, and long-run output effects of permanent and temporary shocks in public consumption under various financing methods. To this end, a dynamic macroeconomic model for a closed economy is developed, which features a perfectly competitive final goods sector and a monopolistically competitive intermediate goods sector. Finitely lived households consume final goods, supply labor, and save part of their income. Amongst the findings for a permanent rise in public consumption are: (i) monopolistic competition increases the absolute value of the balanced-budget output multiplier; (ii) positive long-run output multipliers are obtained only if the generational turnover effect is dominated by the intertemporal labor supply effect; (iii) short-run out- put multipliers under lump-sum tax financing are smaller than long-run output multipliers if labor supply is elastic; and (iv) bond financing reduces the size of long-run output multipliers as compared to lump-sum tax financing and may give rise to non-monotonic adjustment paths if labor supply is sufficiently elastic and the speed of adjustment of lump-sum taxes is not too high. Temporary bond-financed fiscal shocks are shown to yield: (i) permanent effects on output; and (ii) negative long-run output multipliers.fiscal policy, output multipliers, Yaari-Blanchard model, overlapping generations, monopolistic competition, love of variety, temporary fiscal shocks

Currency Invoicing in International Trade: A Panel Data Approach

The paper empirically investigates the determinants of currency invoicing in Dutch goods trade with OECD countries. To this end, a currency-share systems approach is employed, which is applied to quarterly panel data for 1987–1998. One of the key findings is that a country’s share of producer currency pricing falls if demand in the foreign export market falls. In addition, we find that the better developed the partner country’s banking sector and the larger its share in world trade, the lower is the share of Dutch guilder invoicing. A higher expected rate of inflation in the partner country increases Dutch guilder invoicing. The depth of the foreign exchange market of a currency, a country’s share in world trade, and a country being part of the European Union are key determinants of vehicle currency use.invoicing currency;Grassman’s law;exchange rate risk;local currency pricing;producer currency pricing;vehicle currencies

Tax Policy, the Macroeconomy, and Intergenerational Distribution

The paper studies the dynamic macroeconomic and welfare effects of tax policy in the context of an overlapping-generations model of the Yaari-Blanchard type for a closed economy. The model is extended to allow for endogenous labor supply and three tax instrumentsónamely, a capital tax, labor income tax, and consumption tax. It is shown that labor taxes increase welfare of old generations whereas capital and consumption taxes reduce their welfare. Copyright 2002, International Monetary Fund

The macroeconomic dynamics of demographic shocks

The paper employs an extended Yaari-Blanchard model of overlapping generations to study how the macroeconomy is affected over time by various demographic changes. It is shown that a proportional decline in fertility and death rates has qualitatively similar effects to capital income subsidies; both per capita savings and per capita consumption increase in the new steady state. A drop in the birth rate, while keeping the death rate constant, reduces per capita savings, but increases per capita consumption, particularly if intertemporal labor supply is very elastic. If the generational turnover effect is sufficiently strong, however, a decline in the birth rate may, contrary to standard results, gives rise to an increase in per capita savings. Finally, a fertility rate reduction which leaves unaffected the rate of generational turnover is shown to have effects qualitatively similar to those of a fall in public consumption. Both per capita savings and per capita output decline, but per capita consumption rises. The non-linear model is simulated to study the quantitative effects of non-infinitesimal demographic shocks.

Labor tax reform and equilibrium unemployment: a search and matching approach

The paper studies simple strategies of labor tax reform in a search and matching model of the labor market featuring endogenous labor supply. Changing the composition of the tax wedge---that is, reducing a payroll tax and increasing a progressive wage tax such that the marginal tax wedge remains unaffected---increases employment, reduces the equilibrium unemployment rate, and increases public revenue as long as workers do not have all the bargaining power in wage negotiations. A strategy of replacing employment taxes by payroll taxes increases employment and reduces the equilibrium unemployment rate, while the effect on public revenue is ambiguous.

Deposit-Refund on Labor: A Solution to Equilibrium Unemployment?

The paper studies the employment effects of a deposit-refund scheme on labor in a simple search-theoretic model of the labor market. It is shown that if a firm pays a deposit when it fires a worker, to be refunded when it employs the same or another worker, the vacancy rate increases and the unemployment rate declines. The scheme introduces rigidities in the labor market, however, which may be undesirable in countries wanting to liberalize their labor markets. Copyright 2002, International Monetary Fund

Currency Invoicing in International Trade:A Panel Data Approach

The paper empirically investigates the determinants of currency invoicing in Dutch goods trade with OECD countries. To this end, a currency-share systems approach is employed, which is applied to quarterly panel data for 1987–1998. One of the key findings is that a country’s share of producer currency pricing falls if demand in the foreign export market falls. In addition, we find that the better developed the partner country’s banking sector and the larger its share in world trade, the lower is the share of Dutch guilder invoicing. A higher expected rate of inflation in the partner country increases Dutch guilder invoicing. The depth of the foreign exchange market of a currency, a country’s share in world trade, and a country being part of the European Union are key determinants of vehicle currency use.

Фандрайзинг як один із шляхів забезпечення економічної безпеки ДВНЗ України в контексті загострення конкуренції між ними (Fundraising as a way to ensure economic security SHEE Ukraine in the context of increased competition between them)

Фандрайзинг як один із шляхів забезпечення економічної безпеки ДВНЗ України в контексті загострення конкуренції між ними. (Fundraising as a way to ensure economic security SHEE Ukraine in the context of increased competition between them.