Tobacco smoking continues to cause considerable premature mortality and morbidity worldwide. Most of the approximately six trillion cigarettes sold globally each year are discarded improperly as ...toxic environmental waste. Tobacco product waste, including cigarette butts, is the most commonly collected waste item worldwide. Of particular concern is the cellulose acetate filter, a poorly degradable plastic additive attached to most commercially manufactured cigarettes. This filter was introduced by the tobacco industry to reduce smokers' perception of harm and risk but it has no health benefit. To inform health policy and practice and improve public health outcomes, governments and society can benefit from cost estimates of preventing, properly disposing of and/or cleaning up tobacco product waste.
This paper provides estimates of the size and determinants of the fiscal policy response to the COVID-19 pandemic across thirty advanced economies. In contrast to the fiscal response to financial ...crises, I find no evidence that fiscal space was an important determinant of the aggressiveness of pandemic fiscal packages. Focusing in on the US fiscal policy response, I discuss the policy implications of the unique features of a pandemic recession. I argue that the social insurance and public health components of the $5.2 trillion US package, such as expanded unemployment insurance and government funding of vaccine development and distribution, were highly appropriate, whereas broad-based stimulus measures, such as the onetime payments to households, were not. Finally, I consider some of the longer-run consequences of the US fiscal policy actions. The aggressive fiscal expansion, along with extensive private saving during the pandemic, is likely to generate rapid growth over the next few years. The rise in the debt-to-GDP ratio, caused by both the policy response and the pandemic recession itself, could limit future fiscal action if anti-debt sentiment reemerges.
Hysteresis and fiscal policy Engler, Philipp; Tervala, Juha
Journal of economic dynamics & control,
08/2018, Letnik:
93
Journal Article
Recenzirano
Odprti dostop
Empirical studies support the hysteresis hypothesis that recessions have a permanent effect on the level of output. We analyze the implications of hysteresis for fiscal policy in a DSGE model. We ...assume a simple learning-by-doing mechanism where demand-driven changes in employment can affect the level of productivity permanently, leading to hysteresis in output. We show that the fiscal output multiplier is much larger in the presence of hysteresis and that the welfare multiplier of fiscal policy–the consumption equivalent change in welfare for one dollar change in public spending–is positive (negative) in the presence (absence) of hysteresis. The main benefit of accommodative fiscal policy in the presence of hysteresis is to diminish the damage of a recession to the long-term level of productivity and, thus, output.
This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule ...and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis.
Of the different types of government outlays, since the 2000s public investment has been the main variable of adjustment during recessions in advanced and emerging economies. These contractions ...(expansions) have been associated with relatively medium-high (low) sovereign spreads, especially in advanced economies. To rationalize these issues, we develop a model of fiscal policy and sovereign default, with corporate default risk. Policymakers must decide between the provision of an unproductive public good and public investment, weighting their respective net benefits in terms of short-term stabilization and debt sustainability. In our model, investment follows a countercyclical stance only in the case of low levels of debt and moderate negative shocks, and otherwise contracts during recessions. The policy stance, along with the mix between different outlays, is determined by how sovereign risk responds to adverse economic shocks.
We study the relationship between discretionary fiscal policy and macroeconomic stability in 21 OECD countries over the 1985–2012 period. The novelties of our contribution lie in the use of annual ...panel data, whereas most of the existing evidence is cross-sectional, and more importantly in the thorough investigation of how fiscal rules affect the policy-macroeconomic stability relationship. We find that the aggressive use of discretionary fiscal policy, particularly of government consumption items, leads to higher volatility of output and, to a lesser extent, inflation. However, when strict fiscal rules are introduced, discretionary policy becomes output-stabilising rather than destabilising. This result can be more easily achieved by rules on balanced budgets, rather than on expenditures, revenues, or debt. On the other hand, fiscal rules are unable to affect the inflation-destabilising nature of discretionary policy, if any, probably because of the higher importance of central banks in that respect.
•We investigate the macroeconomic stabilisation function of fiscal policy.•Aggressive discretionary policy increases macroeconomic volatility.•The adoption of fiscal rules mitigates the output-destabilising role of discretionary policy.•Strict fiscal rules only can achieve this mitigating result.•Fiscal rules are unable to mitigate the potential inflation-destabilising role of discretionary policy.
This article examines whether the efficiency gains accompanying fiscal decentralization generate higher growth in more decentralized economies, applying pooled‐mean group techniques to a panel ...dataset of 23 Organization for Economic Co‐operation and Development (OECD) countries, 1972–2005. We find that spending decentralization has tended to be associated with lower economic growth while revenue decentralization has been associated with higher growth. Since OECD countries are substantially more spending than revenue decentralized, this is consistent with Oates' (1972) hypothesis that maximum efficiency gains require a close match between spending and revenue decentralization. It suggests reducing expenditure decentralization, and simultaneously increasing the fraction financed locally, would be growth‐enhancing. (JEL E62, H71, H72)
We develop a Fiscal Frontier which traces out the maximum government debt level that can be sustained at a given welfare cost. Through duality, the intertemporal policy mix underpinning the Frontier ...mirrors standard Ramsey policy and defines an upper limit on the welfare gains that can be achieved by any fiscal reform. The Frontier is then used to evaluate a variety of fiscal reforms: (1) one-off changes in tax instruments considered in Laffer curve calculations, (2) a gradual reduction in capital taxation proposed by Lucas (1990), and (3) fiscal consolidation strategies akin to those considered by the Congressional Budget Office. Conventional Laffer curve calculations significantly under-estimate the sustainable debt of the US. The desirable pace of capital tax abolition has slowed since the 1970s, but the reform remains close to the Frontier. Achieving debt reduction targets considered by the Congressional Budget Office is typically very costly, especially when the fiscal consolidation is large and must be achieved quickly, but a simultaneous capital tax reform can more than offset those costs in all cases we consider.
This paper makes an innovative contribution to the extant literature by analysing the determinants of economic stimulus packages implemented by governments in response to the COVID‐19 pandemic. In ...particular, we explore whether stock market declines observed in many countries can predict the size of COVID‐19 stimulus packages. Moreover, we explore whether a country's level of income can augment the underlying relationship between stock market declines and stimulus packages. The findings reveal that a larger stock market decline results in a larger stimulus package; however, this effect is only observed in countries that have an income level greater than the mean and/or median per capita gross domestic product (GDP). Moreover, our results show that monetary policy is more responsive to a stock market decline than fiscal policy. Thus, our results underscore the importance of international donor agencies such as the World Bank and International Monetary Fund (IMF) in supporting less affluent countries in coping with the adverse impacts of the COVID‐19 pandemic on their economies.
Our central banks set interest rates, and do not even pretend to control money supplies. How do interest rates affect inflation? We finally have a complete economic theory of inflation under interest ...rate targets and unconstrained liquidity. Its long-run properties mirror those of monetary theory: Inflation can be stable and determinate under interest rate targets, including a peg, analogous to a k-percent rule.
Uncomfortably, stability means that higher interest rates eventually raise inflation, just as higher money growth eventually raises inflation. Sticky prices generate some short-run non-neutrality: Higher nominal interest rates can raise real rates and lower output. A model in which higher nominal interest rates temporarily lower inflation, without a change in fiscal policy, is a harder task. I exhibit one such model, but it paints a more limited picture than standard beliefs. Generically, without a change in fiscal policy, monetary policy can only move inflation from one time to another.
The last decade has provided a near-ideal set of natural experiments to distinguish the principal theories of inflation. Inflation did not show spirals or indeterminacies at the long zero bound. The large monetary-fiscal expansion of the covid era produced a temporary spurt of inflation. The same money unleashed in quantitative easing had no such effect.
•Fiscal theory produces a complete theory of inflation under interest rate targets.•Inflation is stable and determinate under a peg, analogous to a k-percent rule.•The economy is long-run neutral; higher interest rates eventually raise inflation.•Higher interest rates can lower inflation, but only by raising inflation later.•The last decade has seen ideal experiments that distinguish theories of inflation.
PDF
