The Impact of Fiscal Rules on Public Finances: Theory and Empirical Evidence for the Euro Area

This paper presents a review of the most significant fiscal rules policymakers can choose from. The insights from this review are then applied to the current budgetary situation of the European Union. In the European Union, the supranational Stability and Growth Pact (SGP) should provide the necessary guidance in limiting governmental borrowing by member states. In addition to the SGP, European countries are implementing various other fiscal rules that bind central, regional and local governments. We provide empirical estimates of the effect of fiscal rules on fiscal balance, government spending and government revenues, using a Fiscal Rule Index. We find that fiscal rules have some effect on fiscal balances.euro area, fiscal policy, policy rules, fiscal sustainability

The impact of COVID-19 on households' income in the EU

This analysis makes use of economic forecasts for 2020 issued by the European Commission in Autumn 2019 and Spring 2020, and of a counterfactual under a no-policy change assumption, to analyse the impact of the COVID-19 crisis on EU households' income. Additionally, our analysis assesses the cushioning effect of discretionary fiscal policy measures taken by the EU Member States. We find that the COVID-19 pandemic is likely to affect significantly households' disposable income in the EU, with lower income households being more severely hit. However, our results show that due to policy intervention, the impact of the crisis is expected to be similar to the one experienced during the 2008–2009 financial crisis. In detail, our results indicate that discretionary fiscal policy measures will play a significant cushioning role, reducing the size of the income loss (from -9.3% to -4.3% for the average equivalised disposable income), its regressivity and mitigating the poverty impact of the pandemic. We conclude that policy interventions are therefore instrumental in cushioning against the impact of the crisis on inequality and poverty

The Macroeconomic Effects of Tax Changes: Evidence Using Real-time Data for the European Union

This paper examines the macroeconomic effects of tax changes in the European Union between 2000 and 2016. The novelty of our approach hinges on the use of real-time estimates of discretionary fiscal adjustments. In particular, exploiting a unique database covering anticipated and unanticipated tax changes, we provide the first narrative panel estimates of output and employment multipliers for tax changes. Our results suggest that medium-term revenue-based output multipliers are in the range of -1.1 to -1.9 for unanticipated tax changes. Preannounced changes, on the other hand, temporarily impact economic activity inversely upon announcement, resulting in a less than one-to-one change in ex post tax receipts, but portray up to one percentage point larger employment responses. Finally, we find evidence of asymmetry between the effects of revenue increasing and decreasing measures in the European Union.JRC.B.2-Fiscal Policy Analysi

Fiscal rule infringement risks: a stochastic characterization of EMU budgets and their discipline

With the recent debt crisis, the necessity of effective measures for safeguarding fiscal sustainability has become patent, leading to an intense debate. Most of the debate focuses on strengthening fiscal rules and restoring fiscal imbalances through austerity measures. In this paper, I address two issues impeding the success of these measures: macroeconomic uncertainty and fiscal policy reaction. Specifically, I apply a structural VAR model to characterize the shocks to growth, inflation and interest rates. In combination with the estimation of fiscal reaction functions, this allows for the application of a Monte Carlo-based approach for deriving the distribution of uncertainty of fiscal realizations. Furthermore, the model quantifies fiscal rule infringement risks and the distribution of the adjustment necessary to restore sustainability. The model thus lends empirical support to recent literature emphasizing uncertainty as essential to the appraisal of a country's fiscal position. Results suggest that the Italian debt path is typified by higher intrinsic uncertainty than its European counterparts. Yet, taking into account the behavioral uncertainty of fiscal policy makers, Spain is the most likely country not to live up to the debt brake in the medium-run. This may impel the enforcement of stricter surveillance to hedge against disadvantageous outcomes.status: publishe

Uncertainty and the preferred instrument for fiscal discipline under multitier government

This paper assesses the impact of budgetary uncertainty on the optimum instrument for fiscal discipline. In addition to exogenous uncertainty, with respect to both the savings and damages of the public deficit, the model accommodates for externalities as a result of a multitier government structure. Hence, the model approximates fiscal discipline measures within federations and especially within a monetary union. Alternative to the frequently proposed fiscal rule constraining the magnitude of the public deficit, the paper sets forth a price control (i.e. a penalty) as a policy instrument. The preferred instrument for fiscal discipline is found to be dependent on the slopes of the marginal savings and damage curves, the savings uncertainty and the correlation between uncertainty in savings and damage as well as between member states' savings shocks. In particular, strongly asymmetric shocks to budgetary policy run a borrowing constraint undesirable. The latter is stressed as exceptionally disturbing as EMU member states are still considered to be asymmetric in their stochastics, while stressing borrowing constraints as the principal instrument for fiscal discipline.status: publishe

Impact of fermentable protein, by feeding high protein diets, on microbial composition, microbial catabolic activity, gut health and beyond in pigs

In pigs, high protein diets have been related to post‐weaning diarrhoea, which may be due to the production of protein fermentation metabolites that were shown to have harmful effects on the intestinal epithelium in vitro. In this review, we discussed in vivo effects of protein fermentation on the microbial composition and their protein catabolic activity as well as gut and overall health. The reviewed studies applied different dietary protein levels, which was assumed to result in contrasting fermentable protein levels. A general shift to N‐utilisation microbial community including potential pathogens was observed, although microbial richness and diversity were not altered in the majority of the studies. Increasing dietary protein levels resulted in higher protein catabolic activity as evidenced by increased concentration of several protein fermentation metabolites like biogenic amines in the digesta of pigs. Moreover, changes in intestinal morphology, permeability and pro‐inflammatory cytokine concentrations were observed and diarrhoea incidence was increased. Nevertheless, higher body weight and average daily gain were observed upon increasing dietary protein level. In conclusion, increasing dietary protein resulted in higher proteolytic fermentation, altered microbial community and intestinal physiology. Supplementing diets with fermentable carbohydrates could be a promising strategy to counteract these effects and should be further investigated.</p

Rekening 14 - Een Vergelijking tussen de partijprogramma's

status: publishe

Presence of Unabsorbed Free Amino Acids at the End of the Small Intestine Indicates the Potential for an Increase in Amino Acid Uptake in Humans and Pigs

Unabsorbed free amino acids (AAs) at the end of the small intestine result in a potential preventable nutritional loss. Objectives: This study aimed to quantify free AAs in terminal ileal digesta of both humans and pigs to investigate its relevance for the nutritional value of food proteins. Methods: Two studies with three diets were performed: a human study—ileal digesta from eight adult ileostomates were collected over 9 h after ingestion of a single meal unsupplemented or supplemented with 30 g zein or whey; pig study—12 cannulated pigs were fed for 7 d with a diet containing whey or zein or no-protein diet, and ileal digesta were collected on the last 2 d. Digesta were analyzed for total and 13 free AAs. True ileal digestibility (TID) of AAs was compared with and without free AAs. Results: All terminal ileal digesta samples contained free AAs. The TID of AAs in whey was 97% ± 2.4% (mean ± SD) in human ileostomates and 97% ± 1.9% in growing pigs. If the analyzed free AAs would have been absorbed, TID of whey would increase by 0.4%-units in humans and 0.1%-units in pigs. The TID of AAs in zein was 70% ± 16.4% in humans and 77% ± 20.6% in pigs and would increase by 2.3%-units and 3.5%-units, respectively, if the analyzed free AAs would have been fully absorbed. The largest difference was observed for threonine from zein: if free threonine was absorbed, the TID would increase by 6.6%-units in both species (P < 0.05). Conclusions: Free AAs are present at the end of the small intestine and can potentially have a nutritionally relevant effect for poorly digestible protein sources, whereas the effect is negligible for highly digestible protein sources. This result provides insight into the room for improvement of a protein's nutritional value if all free AAs are to be absorbed. J Nutr 2023;xx:xx–xx. This trial was registered at clinicaltrials.gov as NCT04207372