Managing fiscal policy—the revenues and spending of an individual nation—is among the most challenging tasks facing governments. Wealthy countries are constrained by complex regulation and taxation policies, while developing nations often face high inflation and trade taxes. In this volume,...

This book presents an overview of the economics and politics implemented in the European Union and especially the Eurozone during the crisis of 2008-2012. Although it focuses on these four years, the analysis starts from the establishment of the European Union and covers the period up to the...

Empirical evidence suggests that for many countries, retail prices of traded goods are sticky in national currencies. Movements in exchange rates then cause deviations from the law of one price, and exchange rate ëmisalignmentí, which cannot be corrected by monetary policy alone. This paper...

By reducing the real value of nominally fixed tax band limits, deductions and tax credits, inflation can lead to higher real tax burdens (“fiscal drag”). The traditional view is that this reduces aggregate demand and thus acts as an automatic stabiliser. Yet, this familiar reasoning ignores...

Optimal monetary and fiscal policies within the European Economic and Monetary Union (EMU) are determined by simulating a global model under alternative assumptions about the objective function of the European Central Bank (ECB) and about cooperation vs. non-cooperation with fiscal...

This chapter examines changes in US monetary policy uncertainty (ΔMPU) and fiscal policy uncertainty (ΔFPU) on stock returns while controlling for downside risk, lagged dividend yield, and time series patterns. Testing G7 markets consistently shows that both ΔMPU and ΔFPU have significant...