A timely and incisive look at austerity measures that succeed—and those that don’t. Fiscal austerity is hugely controversial. Opponents argue that it can trigger downward growth spirals and become self-defeating. Supporters argue that budget deficits have to be tackled aggressively at all times and at all costs. In this masterful book, three of today’s leading experts –
Opinions regarding capital account openness have been undergoing changes. On the one hand, financial liberalization and integration are viewed as sources of economic growth and prosperity due to a better allocation of capital to productive uses. In addition, free capital mobility and access to foreign capital are considered to be important facilitators of investment as well as cross-border risk
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The
This study investigates the interrelation between the household leverage cycle, collateral constraints, and monetary policy. Using data on the U.S. economy, we find that a contractionary monetary policy shock leads to a large and significant fall in economic activity during periods of household deleveraging. In contrast, monetary policy shocks only have insignificant effects during a household
We estimate the effect of government spending shocks on the U.S. economy with a time‐varying parameter vector autoregression. The recent Great Recession period appears to be characterized by uniquely large impulse responses of output to fiscal shocks. Moreover, the particularity of this period is underlined by highly unusual responses of several other variables. The pattern of fiscal shock
Förderbanken sind in den letzten Jahren sowohl in Deutschland als auch in Europa immer wichtiger geworden. Über zehn Jahre nach Ausbruch der Großen Finanzkrise, bald zehn Jahre seit Beginn der Europäischen Staatsschuldenkrise und mitten in der gesellschaftlichen Diskussion um die notwendigen Investitionen zur Begrenzung des Klimawandels und zur Verbesserung von Infrastrukturen
We present evidence on the open economy consequences of US fiscal policy shocks identified through proxy-instrumental variables. Tax shocks and government spending shocks that raise the government budget deficit lead to persistent current account deficits. In particular, the negative response of the current account to exogenous tax reductions through a surge in the demand for imports is among the
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