This Paper studies how discretionary fiscal policy affects output volatility and the rate of economic growth. Using data on fifty-one countries we isolate five empirical regularities: (1) Governments that use often fiscal policy make their economies volatile; (2) The use of fiscal policy is...

This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in natural land productivity and their impact on the return to agricultural investment have had a persistent effect on...

This paper investigates how telecommunications infrastructure affects economic growth. This issue is important and has received considerable attention in the popular press concerning the creation of the 'information superhighway' and its potential impacts on the economy. We use evidence from 21...

This paper uses a two-country overlapping generations model to study the international transmission of fiscal policy among open interdependent economies under free international capital mobility. With only lump-sum taxes and transfers, international transmission involves only pecuniary...

This paper considers the effects of monetary and fiscal policies in an optimizing model with capital accumulation and finite lives. An increase in monetary growth is no longer superneutral in a money-capital economy, but leads to a reduction in the real interest rate and increases in the capital...

This paper analyses the changes to the tax and social security systems that have occurred since Czechoslovakia's `velvet revolution' in 1989. It shows how the tax system is moving to meet the requirements of a market economy. It suggests that a particularly high priority has to be given to...

The paper investigates four challenges to exchange rate stability in the coming years and explores their implications for macroeconomic and exchange rate policy. The first section explores the importance of seigniorage in financing the government budget in Southern European countries. The second...

A new theory of price determination suggests that if primary surpluses are independent of the level of debt, the price level has to ‘jump’ to assure fiscal solvency. In this regime (which we call fiscal dominant), monetary policy has to work through seignorage to control the price level. If,...

The microeconomic foundations provided by the 'disequilibrium' macro-modelling approach of Barro-Grossman-Malinvaud are used to compare the performance of government spending and taxation as instruments of fiscal demand management in achieving a welfare optimum. Spending is successively treated...

This paper studies the role of automatic stabilizers using a sample of OECD countries and US states. We find that there is a strong and robust negative correlation between measures of government size and the volatility of output. This correlation is robust to the inclusion of a large set of...