Publications

200 publications found, searching for 'Fiscal Policy '

• Working Paper No. 1025 August 01, 2023

  Unconventional Monetary Policy or Automatic Stabilizers?

  Nitin Nair
  Abstract

  The purpose of public policy, expansionary or contractionary, is to encourage the expansion of income, output, and employment. Theory decides the nature and kind of policy, and the underlying mechanics that result in expansion. Keynes (1964) brings money and a monetary production economy to the forefront of economic analysis, yet in the General Theory, he […]

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• Strategic Analysis July 20, 2023

  Will the US Debt Ceiling Deal Derail the Pandemic Recovery?

  Dimitri B. Papadimitriou, Gennaro Zezza, Michalis Nikiforos, and Giuliano Toshiro Yajima
  Abstract

  In this Strategic Analysis, Dimitri B. Papadimitriou, Michalis Nikiforos, Giuliano T. Yajima, and Gennaro Zezza discuss how the current state and structural features of the US economy might affect its future trajectory. The recent recovery after the pandemic has been remarkable, when compared to previous cycles, and offers evidence of the efficacy of fiscal policy. […]

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• Working Paper No. 1023 July 14, 2023

  Climate Change and Fiscal Marksmanship

  Lekha S. Chakraborty, Amandeep Kaur, Ajay Narayan Jha, and Balamuraly B
  Abstract

  According to the theory of efficient markets, economic agents use all available information to form rational expectations. The rational expectations hypothesis asserts that information is scarce, the economic system generally does not waste information, and that expectations depend specifically on the structure of the entire system. Fiscal marksmanship—the accuracy of budgetary forecasting—can be one important […]

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• One-Pager December 07, 2022

  The Causes of Pandemic Inflation

  L. Randall Wray
  Abstract

  While the trigger for the Covid recession was unusual—a collapse of the supply side that produced a drop in demand—the inflation the US economy is now facing is not atypical, according to L. Randall Wray. In this one-pager, he explores the causes of the current inflationary environment, arguing that continuing inflation pressures come mostly from […]

  Download One-Pager No. 70 PDF (128.13 KB)
• Working Paper No. 1010 September 06, 2022

  Reflections on Angela Merkel’s Career as Chancellor of Germany and the Greek Financial Odyssey

  George Zestos, Harrison Whittleton, and Alejandro Fernandez-Ribas
  Abstract

  Angela Merkel is the second-longest-serving chancellor of modern Germany, with more than 16 years in office. During her tenure there were many years of economic stability, but there were also years of domestic, EU, and geopolitical tensions. Merkel inherited an economy that was recovering after the launching of probusiness policies known as the Hartz I […]

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• Policy Notes No. 2 April 22, 2022

  A Race to the Bottom

  Nikolaos Rodousakis, Vlassis Missos, and George Soklis
  Abstract

  More than a decade after the 2009 crisis, the standards of living of the Greek population are still contracting and the prospects are gloomy. In this policy note, Vlassis Missos, Research Associate Nikolaos Rodousakis, and George Soklis deal with how to approach the measurement of income loss and poverty in Greece and argue for the […]

  Download Policy Note 2022/2 PDF (661.02 KB)
• Working Paper No. 1002 February 04, 2022

  COVID-19 and Fiscal-Monetary Policy Coordination

  Lekha S. Chakraborty, and Harikrishnan S
  Abstract

  Against the backdrop of the COVID-19 pandemic, this paper analyzes the economic stimulus packages announced by the Indian national government and tries to identify some plausible fiscal and monetary policy coordination. The shrinking fiscal space due to revenue uncertainties has led to a theoretical plausibility of a reemergence of finite monetization of deficits in India. […]

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• Working Paper No. 996 December 13, 2021

  Seven Replies to the Critiques of Modern Money Theory

  Abstract

  Modern Money Theory (MMT) has generated considerable scrutiny and discussions over the past decade. While it has gained some acceptance in the financial sector and among some politicians, it has come under strong criticisms from all sides of the academic spectrum and from conservative political circles. MMT has been argued to be both fascist and […]

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• One-Pager No. 68 November 01, 2021

  Are Concerns over Growing Federal Government Debt Misplaced?

  L. Randall Wray
  Abstract

  With the US Treasury cutting checks totaling approximately $5 trillion to deal with the COVID-19 crisis, Senior Scholar L. Randall Wray argues that when it comes to the federal government, concerns about affordability and solvency can both be laid to rest. According to Wray, the question is never whether the federal government can spend more, […]

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• Working Paper No. 990 July 02, 2021

  Ecological Fiscal Transfers and State-level Budgetary Spending in India

  Lekha S. Chakraborty, Amandeep Kaur, Ranjan Kumar Mohanty, and Divy Rangan
  Abstract

  Using panel data models, we analyze the flypaper effects—whether intergovernmental fiscal transfers or states’ own income determine expenditure commitments—on ecological fiscal spending in India. The econometric results show that the unconditional fiscal transfers, rather than the states’ own income, determine ecological expenditure in the forestry sector at subnational levels in India. The results hold when […]

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• Policy Notes No. 3 June 08, 2021

  Why President Biden Should Eliminate Corporate Taxes to Build Back Better

  L. Randall Wray, and Edward Lane
  Abstract

  Edward Lane and L. Randall Wray explain how federal taxes on corporate profits are not well suited to either containing inflationary pressures or reducing inequality. They are not only a poor complement to President Biden’s proposed infrastructure plans, but are inefficient and ineffective taxes more broadly, according to Lane and Wray. The authors follow Hyman […]

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• One-Pager No. 67 June 07, 2021

  Should Corporate Tax Hikes Be Included in Biden’s “Build Back Better” Plans?

  L. Randall Wray, and Edward Lane
  Abstract

  President Biden has proposed pairing his American Jobs Plan with an increase in federal corporate income taxes. Leaving aside the issue of whether any tax increases are needed to “pay for” the plan, Edward Lane and L. Randall Wray assess the proposed corporate profits tax hike in terms of its ability to meet two objectives: […]

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• Working Paper No. 986 March 10, 2021

  Keynes’s Theories of the Business Cycle

  Pablo Gabriel Bortz
  Abstract

  This paper traces the evolution of John Maynard Keynes’s theory of the business cycle from his early writings in 1913 to his policy prescriptions for the control of fluctuations in the early 1940s. The paper identifies six different “theories” of business fluctuations. With different theoretical frameworks in a 30-year span, the driver of fluctuations—namely cyclical […]

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• Working Paper No. 985 February 08, 2021

  Has Japan Been Following Modern Money Theory Without Recognizing It?

  L. Randall Wray, and Yeva Nersisyan
  Abstract

  Modern Money Theory (MMT) economists have used Japan as an example of a country that demonstrates that high deficits and debt do not lead to insolvency, high interest rates, or inflation. MMT insists that governments that issue their own sovereign currency cannot be forced into insolvency, that they can make all payments as they come […]

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• Working Paper No. 979 November 20, 2020

  Is It Time to Eliminate Federal Corporate Income Taxes?

  L. Randall Wray, and Edward Lane
  Abstract

  As the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation’s infrastructure, and many other worthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In this working paper, Edward Lane and […]

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• Working Paper No. 969 September 24, 2020

  The Empirics of UK Gilts’ Yields

  Tanweer Akram, and Huiqing Li
  Abstract

  This paper analyzes the nominal yields of UK gilt-edged securities (“gilts”) based on a Keynesian perspective, which holds that the short-term interest rate is the primary driver of the long-term interest rate. Quarterly data are used to model gilts’ nominal yields. These models bring to light the complex dynamics relating the nominal yields on gilts […]

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• One-Pager No. 64 August 19, 2020

  Moral Hazard and the State Budget Crisis

  Alex Williams
  Abstract

  As congressional negotiations stall and state governments are poised to enact significant austerity, Alex Williams argues that fiscal aid to state governments should be tied to economic indicators rather than the capriciousness of federal legislators. Building this case for reform requires confronting a common objection: that state fiscal aid creates situations of moral hazard. This […]

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• Public Policy Brief No. 152 August 10, 2020

  Moral Hazard in a Modern Federation

  Alex Williams
  Abstract

  The mainstream fiscal federalism literature has led to an instinctive belief that states receiving fiscal aid during a recession are taking advantage of the federal government in pursuit of localized benefits with dispersed costs. This policy brief by Alex Williams challenges this unreflective argument and, in response, offers a novel framework for understanding the relationship […]

  Download Public Policy Brief No. 152, 2020 PDF (206.35 KB)
• Working Paper No. 966 August 03, 2020

  Developing a Macro-Micro Model for Analyzing Gender Impacts of Public Policy

  Susan Himmelweit, and Jerome De Henau
  Abstract

  This paper discusses new methods of combined macro-micro analysis of labor demand and supply to investigate the gender impacts of public policy. In particular it examines how studies have used input-output analysis together with more or less sophisticated methods of allocating people to jobs to model the impact of public investment in care on the […]

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• Working Paper No. 964 July 27, 2020

  Budget Credibility of Subnational Governments

  Lekha S. Chakraborty, Pinaki Chakraborty, and Ruzel Shrestha
  Abstract

  Budget credibility, or the ability of governments to accurately forecast macro-fiscal variables, is crucial for effective public finance management. Fiscal marksmanship analysis captures the extent of errors in the budgetary forecasting. The fiscal rules can determine fiscal marksmanship, as effective fiscal consolidation procedures affect the fiscal behavior of the states in conducting the budgetary forecasts. […]

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• Policy Notes No. 5 July 10, 2020

  Debt Management and the Fiscal Balance

  Jan Toporowski
  Abstract

  In this policy note, Jan Toporowski provides an analysis of government debt management using fiscal principles derived from the work of Michał Kalecki. Dividing the government’s budget into a “functional” and “financial” budget, Toporowski demonstrates how a financial budget balance—servicing government debt from taxes on wealth and profits that do not affect incomes and expenditures […]

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• Working Paper No. 960 July 09, 2020

  Fiscal Policy in Argentina, Brazil, and Mexico and the 2030 Agenda for Sustainable Development

  Bendreff Desilus
  Abstract

  Fiscal policy is useful as a government instrument for supporting the economy, contributing to an increase in employment, and reducing inequality through more egalitarian income distribution. Over the past 30 years, developing countries have failed to increase their real wages due to the lack of domestic value-added in the era of globalization, where global supply […]

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• Public Policy Brief No. 151 June 16, 2020

  Crisis, Austerity, and Fiscal Expenditure in Greece

  Michalis Nikiforos
  Abstract

  This policy brief provides a discussion of the relationships between austerity, Greece’s macroeconomic performance, debt sustainability, and the provision of healthcare and other social services over the last decade. It explains that austerity was imposed in the name of debt sustainability. However, there was a vicious cycle of recession and austerity: each round of austerity […]

  Download Public Policy Brief No. 151, 2020 PDF (841.90 KB)
• Working Paper No. 950 April 08, 2020

  Public Charge in the Time of Coronavirus

  Martha Tepepa
  Abstract

  The United States government recently passed legislation and stabilization packages to respond to the COVID-19 (i.e., coronavirus disease 2019) outbreak by providing paid sick leave, tax credits, and free virus testing; expanding food assistance and unemployment benefits; and increasing Medicaid funding. However, the response to the global pandemic might be hindered by the lassitude of […]

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