In 2009, just before the full outbreak of the global financial crisis, Olivier Blanchard (2009) published an article giving a favourable appraisal of the state of macroeconomics. He came to this verdict on the basis that, after a long period of fierce theoretical debate, the discipline had...

We explore the underlying determinants of the macroeconomic effects of fiscal policy and tax and social security reform using the Global Fiscal Model (GFM). We show that the planning horizon of consumers, access to financial markets, and the elasticity of labor supply, as well as the...

We explore the underlying determinants of the macroeconomic effects of fiscal policy and tax and social security reform using the IMF's Global Fiscal Model (GFM). We show that the planning horizon of consumers, access to financial markets, and the elasticity of labor supply, as well as the...

This paper proposes a tractable framework to analyze fiscal space and the dynamics of government debt, with a possibly binding zero lower bound (ZLB) constraint. Without the ZLB, a greater primary deficit unambiguously raises debt. However, debt need not explode: When R G – φ, where φ is...

EU fiscal rules are meant to keep public finances on a sustainable path. This paper presents a new database that tracks numerical compliance with the four main rules of the Stability and Growth Pact starting in 1998. Our assessment of numerical compliance abstracts from the many exceptions and...

This commentary critically analyzes the debate between ‘deficit financing' and ‘deficit-reduction financing' in contemporary economics. Reading through the paper by Ann Pettifor (2019), one gets the impression that deficits don't matter and that fiscal consolidation has not improved the...

This paper argues that sovereign debt restructurings as agreed between defaulting states and their multilateral, bilateral, or private creditors constitute exercises of international public authority. Their authoritative character results from their effects on the citizens of the defaulting...

EU fiscal rules are meant to keep public finances on a sustainable path. This paper presents a new database that tracks numerical compliance with the four main rules of the Stability and Growth Pact starting in 1998. Our assessment of numerical compliance abstracts from the many exceptions and...

Last global financial crisis resulted in common among developed countries implementation of expansionary fiscal policy as an anti-recession tool. This led to the renewal of academic discussion on stabilization effectiveness of fiscal policy. In this context, the main research goal of this paper...

The excess procyclicality of fiscal policy is commonly viewed as a central malaise in emerging economies. We document that procyclicality is more pervasive in countries with higher sovereign risk and provide a model of optimal fiscal policy with nominal rigidities and endogenous sovereign...