Fiscal Policy in the European Union PDF
Preview Fiscal Policy in the European Union
Fiscal Policy in the European Union This page intentionally left blank Fiscal Policy in the European Union Editedby Jesús Ferreiro Giuseppe Fontana and Felipe Serrano Selectionandeditorialmatter©JesúsFerreiro,GiuseppeFontanaandFelipe Serrano2008 Chapters©individualcontributors2008 Softcover reprint of the hardcover 1st edition 2008 978-0-230-20399-0 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noportionofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency, SaffronHouse,6-10KirbyStreet,LondonEC1N8TS. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorshaveassertedtheirrightstobeidentified astheauthorsofthisworkinaccordancewiththeCopyright,Designs andPatentsAct1988. Firstpublished2008by PALGRAVEMACMILLAN PalgraveMacmillanintheUKisanimprintofMacmillanPublishersLimited, registeredinEngland,companynumber785998,ofHoundmills,Basingstoke, HampshireRG216XS. PalgraveMacmillanintheUSisadivisionofStMartin’sPressLLC, 175FifthAvenue,NewYork,NY10010. PalgraveMacmillanistheglobalacademicimprintoftheabovecompanies andhascompaniesandrepresentativesthroughouttheworld. Palgrave®andMacmillan®areregisteredtrademarksintheUnitedStates, theUnitedKingdom,Europeandothercountries. ISBN 978-1-349-30161-4 ISBN 978-0-230-22826-9 (eBook) DOI 10.1057/9780230228269 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources.Logging,pulpingandmanufacturing processesareexpectedtoconformtotheenvironmentalregulationsofthe countryoforigin AcataloguerecordforthisbookisavailablefromtheBritishLibrary. LibraryofCongressCataloging-in-PublicationData FiscalpolicyintheEuropeanUnion/editedbyJesusFerreiro, GiuseppeFontanaandFelipeSerrano. p.cm. Includesbibliographicalreferencesandindex. 1. Fiscalpolicy EuropeanUnionCountries.I.Ferreiro,Jesus.II. Fontana,Giuseppe,1968-III.SerranoPérez,Felipe. HJ1000.F564 2008 339.5’2094 dc22 2008029926 10 9 8 7 6 5 4 3 2 1 17 16 15 14 13 12 11 10 09 08 Contents ListofFigures vii ListofTables ix NotesontheContributors xi Introduction JesúsFerreiro,GiuseppeFontanaandFelipeSerrano 1 1 FiscalFederalismintheEuropeanUnion: HowFarAreWe? RuiHenriqueAlvesandOscarAfonso 6 2 IsThereCompatibilitybetweentheStabilityand GrowthPactandAutomaticFiscalStabilizers? SabrinaRostaing-Paris 25 3 StabilizationCapacityandFiscalPolicyintheEMU JorgeUxóGonzálezandM.JesúsArroyoFernández 53 4 FiscalAdjustmentandCompositionofPublic ExpendituresintheEMU JesúsFerreiro,M.TeresaGarcía-del-ValleandCarmenGómez 84 5 PublicCapitalandEconomicGrowth:aSpurious EmpiricalLink? GwenaëllePoilon 109 6 HasFranceBecomeaDeficitRunningCountry? JérômeCreel,GuyGilbertandThierryMadiès 129 7 HowtoDealwithEconomicDivergencesintheEMU? CatherineMathieuandHenriSterdyniak 157 v vi Contents 8 ASchemetoCoordinateMonetaryandFiscalPolicies intheEuroArea CarloPanicoandMartaVázquezSuárez 184 Index 209 List of Figures 2.1(a)–(k) Primarycyclicalbalanceandoutputgapin Europeancountriesfrom1992to2006 36 2.2 Primarycyclicalbalancevs.outputgap 37 2.3(a)–(b) Comparisonbetweenthesizeofautomatic stabilizersandthereferencevaluewithrespect ofthesignoftheoutputgapinGermanyand Francesince1992 45 3.1 InflationdispersioninEMU 57 3.2 Averageinflationrate,1999–2006 57 3.3 GDPrateofgrowth(average,1999–2006) 58 3.4 DifferencesbetweenGDPandtrend(rates ofgrowth1999–2006) 59 3.5 DifferencesbetweenGDPandtrend(ratesof growth,sum1999–2006) 59 3.6 Differentcyclicalpositionandsinglemonetary policyinEMU:SpainandGermany 63 3.7 Realinterestrates 64 3.8 RealexchangeratesULCE(1999=100) 65 3.9 Arestrictivedemandshockwhenthe competitivenesseffectisweak(country1) 71 3.10 Arestrictivedemandshockwhenthe competitivenesseffectisstrong(country1) 74 4.1 Evolutionofpublicexpenditureandtaxation betweentheperiods1990–8and1999–2005 (%GDP) 91 4.2 SizeofpublicsocialexpendituresbeforeEMU (1990–8)andafterEMU(1999–2005)(%GDP) 96 4.3 Evolutionofproductiveandunproductive publicexpendituresaccordingtothe functionalclassification(%GDP) 104 6.1 Governmentbudgetbalance,%ofGDP 130 6.2 Netandgrosspublicdebt,France,%ofGDP, andnominalGDPgrowth 132 6.3 Variousfiscalsurpluses,France,%ofGDP 135 vii viii ListofFigures 6.4 Cyclicallyadjustedgovernmentprimarybalance, %ofpotentialoutput 136 6.5 Estimatednon-taxrevenuesandacquisitionsand disposalsofnon-financialassets 144 List of Tables 1.1 Financialperspectivesfortheperiod2007–2013 15 2.1 Summarytableofcomplianceconditions 41 2.2 Automaticfiscalstabilizers,1992–2006 42 2.3 Periodsofcompatibilitybetweenautomatic fiscalstabilizersandabalancedorsurplus budgetinEMUcountriessince1992 43 2.4 Periodsofcompatibilitybetweenautomatic fiscalstabilizersandabudgetdeficitlowerthan 3percentofGDP 46 2.5 Periodsofcompatibilitybetweenautomatic fiscalstabilizersandabalancedstructural budgetcombinedwithabudgetdeficitlimitin EMUcountriessince1992 47 3.1 Alternativefiscalpolicyrules 69 3.2 Stabilizinganddestabilizingmechanismand modelparameters 72 3.3 Stabilityconditionswithdifferentfiscalpolicyrules 73 3.4 Valueofmodelparametersusedinthesimulations 77 4.1 Evolutionoffiscaldeficitandpublicexpenditure (%GDP) 91 4.2(a)–(c) Evolutionofthesizeofpublicexpenditures (in%GDP)betweentheperiods1990–8and 1999–2005bykindofexpenditure (economicclassification) 93–5 4.3 Publicexpenditures(in%GDP)bykindof expenditure(functionalclassification) 98 4.4 Evolutionofpublicexpenditurebetween1990–8 and1999–2005 102 4.5(a)–(b) Evolutionofproductiveandunproductivepublic expenditure(%GDP) 103 5.1 GovernmentnetcapitalasapercentageofGDP 110 5.2 Governmentnetcapitalasapercentageof privatenon-residentialnetcapital 110 5.3 StudiesbasedonaCobb-Douglasproduction functioninlevel 113 5.4 Studieswithfirstdifferences 114 ix
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