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The Golden Rule of Public Finance: A Panacea?
Mustafa Đsmihan,F. Gulcin Ozkan +1 more
- Vol. 1, Iss: 2, pp 1-20
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TLDR
This paper showed that adopting a golden rule does not guarantee that public investment will improve economic outcomes and argued that policy-makers should prioritise the productivity of public investment rather than its level, and that only when the rate of return on public capital is greater than the cost of public borrowing, expanding public investment is benecial.Abstract:
This paper shows that adopting a golden rule does not guarantee that public investment will improve economic outcomes. Our results suggest that only when the rate of return on public capital is greater than the cost of public borrowing, expanding public investment is bene…cial. Otherwise, both macroeconomic stability and debt sustainability are compromised. As such, we argue that policy-makers should prioritise the productivity of public investment rather than its level.read more
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Raising finance to support developing country action: some economic considerations
TL;DR: In this paper, the authors explore the principles that should guide efforts to raise finance for climate action in developing countries, and conclude that there is an important role for private finance, which would be facilitated by having pervasive and broadly uniform emissions pricing around the world.
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Delivering Green Economy in Asia: The Role of Fiscal Instruments
TL;DR: In this paper, the authors pointed out that the adoption of fiscal instruments is not going to be enough, if Asia as a region is to transition to a green economy, and there are substantial implementation barriers that need to be eased for wide-scale adoption and diffusion of green fiscal instruments.
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Fiscal policy effectiveness and the golden rule of public finance
TL;DR: In this article, the authors used a dynamic stochastic general equilibrium (DSGE) framework with imperfect competition and nominal rigidities to analyze the impact of two different fiscal rules on the effectiveness of fiscal policy.
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Bad Weather for the Stability and Growth Pact
TL;DR: The Euro area needs a credible scheme of budgetary discipline that would allow fiscal authorities to reassure sovereign debt markets and to dissipate the reticence of the ECB in adopting a policy of quantitative easing as mentioned in this paper.
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Advantages of following a golden rule in a monetary union
TL;DR: The authors analyzed the implications of the adoption of the Golden rule in a monetary union, distinguishing between the two types of public expenditure, and showed that introducing a Golden rule and smoothing public investment expenditure would be welfare-improving, and mostly for countries where taxation rates and the productivity of public investment are highest.
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Journal ArticleDOI
Public Capital and Economic Growth: A Critical Survey
Ward E. Romp,Jakob de Haan +1 more
TL;DR: The authors provides an overview of both theoretical and empirical literature on the link between public investment (capital) and economic growth and concludes that although not all studies find a growthenhancing effect of public capital, there is now more consensus than in the past that public capital furthers economic growth.
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Improving the SGP Through a Proper Accounting of Public Investment
Olivier Blanchard,Olivier Blanchard,Francesco Giavazzi,Francesco Giavazzi,Francesco Giavazzi +4 more
TL;DR: The Stability and Growth Pact (SGP) contains a serious error: the way governments are expected to account for public investment as discussed by the authors, and applying the current rules of the SGP to a measure of the budget where the treatment of investment expenditures is done properly would, over time, drive the debt-GDP ratio to the ratio of public capital to GDP.
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Does monetary unification lead to excessive debt accumulation
Roel Beetsma,A. Lans Bovenberg +1 more
TL;DR: In the presence of myopic governments, debt ceilings play a useful role in avoiding excessive debt accumulation in a monetary union and allowing a conservative, independent central bank to focus on price stability as mentioned in this paper.
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Public Investment, the Stability Pact and the ‘Golden Rule’
TL;DR: In this article, the implications of the Stability and Growth Pact for public investment and the pros and cons of introducing a golden rule in EMU's fiscal framework, given the objectives of low public debts and adequate margins for a stabilising budgetary policy.
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Government Capital Formation: Explaining the decline
TL;DR: This article examined whether various hypotheses put forward to explain the downward trends in government capital spending are supported by the data and found support for three hypotheses: (1) capital spending is reduced during periods of fiscal stringency, since this category of government spending is politically an easier target for cuts than other spending categories; (2) myopic governments will cut investment spending more than governments which have a longer policy horizon; and (3) private investment influences government investment spending, because both types of investment are complementary.