Fiscal and Debt Policies for the Future

300 Pages·2014·1.026 MB·English

by  Philip Arestis, Malcolm Sawyer (eds.)

Fiscal and Debt Policies for
the Future
Edited by
Philip Arestis and Malcolm Sawyer
Fiscal and Debt Policies for the Future
International Papers in Political Economy Series
Series Editors: Philip Arestis and Malcolm Sawyer
This is the seventh volume of the new series of International Papers in Political
Economy (IPPE). The new series will consist of an annual volume with four to
five papers on a single theme. The objective of the IPPE will continue to be the
publication of papers dealing with important topics within the broad framework
of Political Economy.
The original series of International Papers in Political Economy started in 1993 and
has been published in the form of three issues a year with each issue containing
a single extensive paper. Information on the old series and back copies can be
obtained from Professor Malcolm Sawyer at the University of Leeds (e-mail: mcs@
lubs.leeds.ac.uk)
Titles include:
Philip Arestis and Malcolm Sawyer (editors)
FISCAL AND DEBT POLICIES FOR THE FUTURE
ECONOMIC POLICIES, GOVERNANCE AND THE NEW ECONOMICS
THE EURO CRISIS
NEW ECONOMICS AS MAINSTREAM ECONOMICS
PATH DEPENDENCY AND MACROECONOMICS
CRITICAL ESSAYS ON THE PRIVATISATION EXPERIENCE
POLITICAL ECONOMY OF LATIN AMERICA
Recent Economic Performance
ALTERNATIVE PERSPECTIVES ON ECONOMIC POLICIES
IN THE EUROPEAN UNION
FINANCIAL LIBERALIZATION
Beyond Orthodox Concerns
21st CENTURY KEYNESIAN ECONOMICS
International Papers in Political Economy
Series Standing Order ISBN 978–1–403–99936–8
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Fiscal and Debt Policies for
the Future
Edited by
Philip Arestis
University of Cambridge, UK
and
Malcolm Sawyer
University of Leeds, UK
Selection and editorial matter © Philip Arestis and Malcolm Sawyer 2014
Individual chapters © Contributors 2014
Softcover reprint of the hardcover 1st edition 2014 978-1-137-26952-2
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First published 2014 by
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ISBN 978-1-349-44399-4 ISBN 978-1-137-26953-9 (eBook)
DOI 10.1057/9781137269539
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Contents
List of Figures vi
List of Tables viii
Preface ix
Notes on the Contributors x
1 The Formulation of Debt and Deficit Policy:
Democracy, Technocracy and Public Policymaking 1
Yiannis Kitromilides
2 On the Sustainability of Budget Deficits and
Public Debts with Reference to the UK 38
Philip Arestis and Malcolm Sawyer
3 Future Fiscal and Debt Policies: Germany in the
Context of the European Monetary Union 76
Eckhard Hein and Achim Truger
4 Sustainable Future Fiscal and Debt Policies:
Lessons from and for Spain 116
Jesús Ferreiro, Carmen Gómez and Felipe Serrano
5 Assessing the Future Sustainability of
French Public Finances 155
Jérôme Creel, Paul Hubert and Francesco Saraceno
6 The Local Government Fiscal Imperative and
Debt Financing in China 195
Yang He, Kun-Chin Lin and Ran Tao
7 Fiscal and Debt Policies for Sustainable US Growth 237
Gennaro Zezza
Index 278
v
List of Figures
3.1 Germany: Sectoral financial balances as a
percentage share of the nominal GDP, 1998–2012 87
3.2 EA 12: Sectoral financial balances as a percentage share
of nominal GDP, 1998–2012 88
3.3 Cyclically adjusted budget balance and output gap,
Germany, 1998–2012 in % of potential GDP 90
3.4 Cyclically adjusted budget balance and output gap,
EA-12, 1998–2012 in % of potential GDP 90
3.5 Simulated German debt level and target path
2005–2035 in % GDP: ‘realistic’ and ‘pessimistic’ case 98
3.6 German budget balance by level of government in %
GDP, 1998–2012 (cycl. Adj. + corr. for one-offs in 2010) 99
3.7 Nominal growth rates of government expenditure
and revenue and GDP in %, 1996–2014
(2013–14 forecasts), Germany 101
3.8 Nominal growth rates of government expenditure
categories and GDP in %, 1996–2014 (2012–14 forecasts),
Germany 101
4.1 Outstanding liabilities of the Spanish economy
by agents, 1980–2011 (percentage of GDP) 137
4.2 Total assets of Spanish credit institutions, 1970–2011
(percentage of GDP) 138
4.3 Spanish fiscal balance (percent GDP) and European Central
Bank interest rates (percent), 1999–2012 140
4.4 Gross debt of the Spanish public administrations
according to the Excessive Deficit Procedure
(percentage of GDP) 147
5.1 Compulsory levies, as % of GDP 166
5.2 Public deficits, in % of GDP 170
5.3 Contributions to public deficits, in % 173
5.4 French government net wealth, in % of GDP 176
vi
List of Figures vii
5.5 Non-financial corporations’ net wealth, in % of GDP 178
5.6 Households’ net wealth, in % of GDP 178
5.7 Average maturity of French debt 180
5.8 Average interest rate of French debt 181
6.1 Household consumption/GDP (%) 208
6.2 Capital formation, consumption, and export in China’s
GDP (%), 1978–2010 209
6.3 The funding system of urban infrastructure in China 215
6.4 Infrastructure funding chain with local financing platform 217
7.1 US main sector balances 248
7.2 Private sector saving and investment 249
7.3 Personal saving, borrowing, investment and debt 251
7.4 Difference between growth in asset prices and
growth in GDP 253
7.5 Income limits for each fifth and top 5 per cent
of households 255
7.6 US net foreign assets and external balance 259
7.7 Real growth in M1 & M2, real interest rate 261
7.8 Government tax revenues and expenditure 263
List of Tables
2.1 Government debt and budget positions in four countries
and the euro area expressed as a percentage of GDP 67
3.1 Key macroeconomic variables in Germany and
the EU-12, average values for 1999–2007 86
3.2 Redistribution requirements for the profit/wage shares in
different scenarios concerning investment, the current
account and the propensity to save from wages 106
4.1 General government fiscal balance, 2006–2012 123
4.2 Cyclically adjusted total revenues of the general
government in the euro area (percentage of GDP) 133
4.3 Revenue and expenditure elasticities 133
4.4 Macroeconomic imbalances and fiscal policy
in Spain, 1999–2012 136
4.5 Fiscal and monetary policy stances in Spain, 2000–2012 141
4.6 Net lending (+) or net borrowing (–) of the
Spanish public administrations, 2000–2011
(percentage of GDP) 145
5.1 Public finance indicators 161
5.2 Composition of government expenditure in 2011,
in percentage of GDP 164
5.3 Indicators of financialisation (in % of GDP) 175
6.1 Central government debt issues in China,
1990–2011 (billion) 200
6.2 Cases of provincial debt levels 203
6.3 Data description of sample of UDICs (RMB) 204
6.4 UDICs by levels of government 218
6.5 Shares of land assets by government levels of UDICs 219
7.1 Social accounting matrix and flow of funds for
a simplified economy 244
viii
Preface
This is the tenth volume of the series of International Papers in Political
Economy (IPPE). The series normally consists of an annual volume with
five to eight papers on a single theme. The objective of the IPPE is the
publication of papers dealing with important topics within the broad
framework of Political Economy.
The original series of International Papers in Political Economy started
in 1993 until the new series began in 2005 and was published in the
form of three issues a year with each issue containing a single extensive
paper. Information on the old series and back copies can be obtained
from the editors: Philip Arestis (e-mail: [email protected]) and Malcolm
Sawyer (e-mail: [email protected]).
The theme of this tenth volume of seven papers is Fiscal and Debt
Policies for the Future. The papers in this volume were initially presented
at a one-day conference in Cambridge, UK (St Catharine’s College), 11
April 2013. The conference was organised by the Department of Land
Economy under the aegis of the Cambridge Trust for New Thinking
in Economics, titled ‘Fiscal and Debt Policies for the Future’. The
Cambridge Trust for New Thinking in Economics fully supported and
financed the conference. The papers were subsequently presented at
the 10th International Conference, titled ‘Developments in Economic
Theory and Policy’, held at Universidad del Pais Vasco, Bilbao, Spain,
27–8 June 2013, which fully supported and funded the special session
to which the papers included in this volume were presented. We are
grateful to the organisers of the Bilbao conference and to the Cambridge
Trust for all the help and funding provided.
ix