Debates about economic policy in Britain have been dominated by claims that sovereign debt problems are due to loose fiscal policy and excessive spending rather than volatile capital flows and flawed ...monetary policy. There are strong grounds for believing that these stories are largely nonsense, yet they inform policy and are widely believed among mass publics, and have proved almost impossible to refute in everyday political discourse. The answer to this puzzle, we suggest, is that such claims are better thought of as bullshit (as conceptualised by Harry Frankfurt 2005) rather than outright falsehoods: in other words, as speech acts that are indifferent to the truth and proceed without effective concern for the veracity of the claim in question. In this paper, we examine the characteristics of political bullshit applied to economic policy debates since the financial crisis, and seek to explain its hold on the popular imagination. We assess what makes some particular brands of bullshit more successful than others, and argue that in a world of competing realities as well as competing theories, the power of rhetoric is more likely to settle an argument than evidence and logic.
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This study examines the impact of economic stimulus policies on tourism-related firms' stock prices, after movement restriction announcements, and differences in the relationships between economic ...policy responses and stock prices for large firms vis-à-vis small firms.
Using a cross-section data of 888 firms from 56 countries listed on several stock exchanges, we find a positive and significant association between the COVID-19 economic stimulus index and 1- and 2-week average changes in tourism firms' stock prices after movement restriction announcements.
Tourism firms' stock prices responded favorably to the introduction of macrofinancial packages and monetary policies. This study complements the literature on stock market reactions during the pandemic and contributes to the growing body of literature examining its overall effect.
The majority of economic actors in the developing world participate in the informal sector, and yet little is known about the political implications of this constituency. I argue that, particularly ...in weak‐state democracies, economic informality constrains the rise of programmatic politics. An uncertain, undocumented, and irregular economic relationship with the state conveys signals about the state that affect citizens’ demand for and ability to coordinate on programmatic policy. Novel survey evidence from urban Senegal illustrates that greater irregularity is associated with weaker perceptions of tax compliance, lower expectations of government, and weaker coordination capacity and that informality is associated with weaker programmatic demands. Experimentally providing information about a salutary fiscal policy causes some informal sector members to positively update expectations about government performance and electoral coordination capacity. Field experiments in two other African democracies increase confidence in the proposition that informality inhibits the formation of a constituency for programmatic politics.
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In a sample of 30 countries during the period 1980–2017, those with lower debt-to-GDP ratios responded to financial distress with much more expansionary fiscal policy and suffered much less severe ...aftermaths. Two lines of evidence together suggest that the relationship between the debt ratio and the policy response is driven partly by problems with sovereign market access, but even more so by the choices made by domestic and international policymakers. First, although there is some relationship between more direct measures of market access and the fiscal response to distress, incorporating the direct measures attenuates only slightly the link between the debt ratio and the policy response. Second, contemporaneous accounts of the policymaking process in episodes of major financial distress show a number of cases where shifts to austerity were driven by problems with market access, but show at least as many where the shifts resulted from policymakers’ choices despite an absence of difficulties with market access. These results point to a twofold message: conducting policy in normal times to maintain fiscal space provides valuable insurance in the event of a financial crisis, and domestic and international policymakers should not let debt ratios unnecessarily determine the response to a crisis.
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I apply a meta-regression analysis to a unique data set of 104 studies on multiplier effects to derive stylized facts and quantify the differing effectiveness of the composition of fiscal impulses, ...adjusted for study design characteristics. Public spending multipliers are close to 1 and about 0.3 to 0.4 units larger than tax and transfer multipliers. Public investment multipliers are even larger than those of spending in general by approximately 0.5 unit. Multipliers vary with study design, whose influence should be laid open when drawing policy conclusions. The analysis provides guidance concerning influential factors, their significance, and magnitude.
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Abstract
We study the interaction between monetary/fiscal policies in a Ramsey–Sidrauski model augmented with the “Green Golden Rule.” We demonstrate conditions whereby monetary and fiscal policy ...under different utility and preference assumptions are or are not environmentally neutral. Despite its nonseparability in utility, we demonstrate that money is environmentally neutral. Policy impacts the environment via the marginal rate of transformation rather than the marginal rate of substitution between consumption and environment. Fiscal policies under a balanced budget are environmentally nonneutral. Only under a nonbalanced budget, when deficits are monetized, is money environmentally nonneutral. Under cash‐in‐advance and transactions costs, money is environmentally nonneutral.
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Energy efficiency is a critical issue in public policies, as it is the key to decoupling economic growth and energy use. These objectives are becoming even more relevant to addressing the energy ...crisis and the new geopolitical scenarios delivered by the Ukraine war. Although several papers have analyzed energy efficiency goals, this paper focuses on energy savings targets, which represent the main efficiency metric for the European Union. This paper fills a gap in literature by analyzing the economic and environmental impacts of attaining energy efficiency targets through an energy fiscal policy, simulated by a hybrid computable general equilibrium model with technological detail. Six scenarios are defined for energy savings in primary/final energy consumption of fossil-fueled/all energy products, using Portugal as a case study. Relevant insights for policy makers from the simulated scenarios include: (i) achieving energy saving targets by alternative means, i.e., directed at primary or final energy consumption, provide heterogeneous impacts on the efficiency of the energy system and GDP, and some unexpected and undesirable outcomes concerning environmental impacts; (ii) a relatively lower taxation of all energy products deliver larger and more distorting impacts on electricity generation than higher taxes on fossil fuels only (a counterintuitive result), (iii) policies aiming to reduce primary energy instead of final energy provide the best outcomes (further increases in the efficiency of the energy system with smoother economic impacts), thereby pointing against the European Energy Taxation directive principle that taxation should be levied on final products, regardless of inputs used in their production and (iv) and targets should not be set up based on energy intensity indicators. Hence, it is shown that the size of the trade-off between economic and environmental concerns depends on where (primary or final energy consumption) and what (fossil or all energy products) energy savings are targeted.
•Primary energy savings lead to smaller economic impacts than final energy savings.•Primary energy savings lead to greater efficiency levels of the energy system.•Against the European Energy Taxation directive principle of better taxing final products.•Taxing all energy provides larger and distorting impacts on electricity generation.•Energy savings targets based on energy intensity improvements may be misleading.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
The COVID-19 pandemic has resulted in an unprecedented slowdown of economic activity worldwide, with an especially negative impact on the tourism sector. The adoption of international travel ...restrictions to contain the spread of the COVID-19 outbreak has brought much of the global tourism industry to a virtual standstill. Governments have introduced a range of economic stimulus packages designed to mitigate the negative effects of the pandemic, including its impact on travel and tourism. This article investigates whether the size of the tourism sector influences the economic policy response to COVID-19 pandemic using data from 136 countries. The findings show that the larger the tourism sector, the larger the economic stimulus package introduced by governments globally. Furthermore, we find that the size of the tourism sector is positively associated with both fiscal and monetary policy responses to the pandemic. The findings suggest that countries with larger tourism sectors adopted more aggressive economic stimulus packages to mitigate the impact of COVID-19 pandemic and reinvigorate floundering economies.
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Consumer Valuation of Fuel Costs and Tax Policy Grigolon, Laura; Reynaert, Mathias; Verboven, Frank
American economic journal. Economic policy,
08/2018, Volume:
10, Issue:
3
Journal Article
Peer reviewed
Open access
To what extent do car buyers undervalue future fuel costs, and what does this imply for tax policy? To address both questions, we show it is crucial to account for consumer mileage heterogeneity. We ...use product-level data for a panel of European countries and exploit fuel cost variation by engine. Despite a modest undervaluation of fuel costs, fuel taxes are more effective in reducing fuel usage than product taxes. They also perform better in terms of welfare, even when usage demand is held fixed. The reason is that fuel taxes better target high mileage consumers to purchase fuel efficient cars.
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We investigate the consequences of an increase in public spending for trade balances and budget deficits in the European Union, using a panel vector auto-regression approach. Whereas the literature ...tends to treat the trade balance/GDP ratio as a single variable, we include exports and imports as separate variables. This allows us to track in more detail the sources of trade balance movements. Further, we use annual rather than quarterly data. This facilitates the interpretation of the shocks and reduces potential anticipation effects of fiscal policy changes. However, the identification assumptions become stronger, and we extensively check their validity. According to our baseline estimate, a 1% GDP increase in public spending produces a 1.2% on impact rise and a 1.6% peak rise in GDP. Rising imports and falling exports are responsible for a fall of the trade balance by 0.5% of GDP on impact and a peak fall of 0.8%. In addition, the spending increase produces a 0.7% impact (and peak) budget deficit, thereby pointing to the potential relevance of the twin deficits hypothesis for the European Union.
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