We analyse the effectiveness of fiscal policy rules for business cycle stabilisation in a monetary union using a quarterly macro-econometric model of Germany. The simulations compare a deficit target and an expenditure target under a range of supply, demand and fiscal shocks. Their effects are evaluated by their impact on prices and output. The analysis demonstrates that in general the deficit target ...
Despite the fact that Argentina has been suffering from recession for years, the timing and severity of the recent currency crisis surprised most observers. There is an extensive literature on early warning systems, which claim to be apt for a systematical prediction of currency crises. One of the most prominent "early warning system" approaches was first developed by Kaminsky, Lizondo, and Reinhart ...
This paper investigates the link between the optimal level of nonfinancial firms' leverage and macroeconomic uncertainty. We develop a structural model of a firm's value maximization problem that predicts that as macroeconomic un-certainty increases the firm will decrease its optimal level of borrowing. We test this proposition using a panel of non{financial US firms drawn from the COM-PUSTAT quarterly ...
We study the effect of politics on the distribution of intergovernmental grants. We consider a model where local government officials lobby the central government who in turn distributes grants based on the local governments' lobbying efforts. We argue that the marginal costs of lobbying increase with the geographical and "political" distance from the central government capital. Hence, in equilibrium, ...
Despite the fact that Argentina has been suffering from recession for years the timing and severity of the recent currency crisis has surprised most observers. This paper analyzes whether the "early warning" or "signals" approach of Kaminsky (1998), Kaminsky/Lizondo/Reinhart (1998) and Kaminsky/Reinhart (1999) could have predicted the Argentinean currency crisis at an earlier point in time. Using a ...
A model of Ukrainian shadow economy money demand is estimated that includes new regulatory burden, tax complexity, andsoft-budget constraint variables. This model is analyzed to determine the causes and dynamics of the Ukrainian shadow economy and to assess the effectiveness of state measures undertaken to reduce itssize. The direct tax burden, the broadly defined regulatory burden, the complexity ...
