This paper assesses how a permanent shift from financing a public pay-as-you-go pension by direct (labour income) taxation towards financing it by indirect(consumption) taxation affects the economy and welfare. To this end, we use anoverlapping-generations-augmented two-region general...

This paper assesses how a permanent shift from financing a public pay-as-you-go pension by direct (labour income) taxation towards financing it by indirect(consumption) taxation affects the economy and welfare. To this end, we use anoverlapping-generations-augmented two-region general...

Fiscal devaluation works as an alternative instrument to monetary de- valuation, helping countries to regain competitiveness in a monetary union. Focusing on a closed economy, this paper analyzes its effects in a dynamic framework. In the case of an increasing relative love for variety, fiscal...

Fiscal devaluation works as an alternative instrument to monetary de- valuation, helping countries to regain competitiveness in a monetary union. Focusing on a closed economy, this paper analyzes its effects in a dynamic framework. In the case of an increasing relative love for variety, fiscal...

We analyze the economic consequences of forming a monetary union among countries with varying degrees of financial distortions, which interact with the firms' pricing decisions because of customer-market considerations. In response to a financial shock, firms in financially weak countries (the...

We study the short-run macroeconomic effects of trade policies that are equivalent in a friction-less economy, namely a uniform increase in import tariffs and export subsidies (IX), an increase in value-added taxes accompanied by a payroll tax reduction (VP), and a border adjustment of corporate...

The aim of this study is to analyse the state of the competitiveness of seven Western Balkan economies and to suggest policy recommendations in order to increase their capacity to compete. Most countries from the Western Balkans have a persistent current account deficit of about 10% of GDP which...

The Western Balkans are a region with a substantial economic catch-up potential. Compared to other European economies these countries are either poor or very poor. Structural underdevelopment and low competitiveness impede the catch-up process. Mass unemployment and a huge trade deficit indicate...

The Western Balkans are a region with a substantial economic catch-up potential. Compared to other European economies these countries are either poor or very poor. Structural underdevelopment and low competitiveness impede the catch-up process. Mass unemployment and a huge trade deficit indicate...

Die meisten Westbalkanländer haben ein hohes und in der Regel persistentes Leistungsbilanzdefizit von annähernd 10% des BIP. Reduktionen des Leistungsbilanzdefizits der letzten Jahre sind vor allem auf krisenhafte Importzurückhaltung zurückzuführen. Das durchschnittliche Westbalkanland (im...

Member countries of the euro area, and the peripheral states in particular, face an especially difficult problem: on the one hand, they urgently need stronger economic growth to reduce high debt and unemployment levels. On the other hand, however, they have no scope to use fiscal policy to...

Die Mitgliedsländer der Eurozone, vor allem die sogenannten Peripheriestaaten, stehen vor einem schwer zu lösenden Problem: Einerseits benötigen sie dringend ein stärkeres Wirtschaftswachstum, um die aufgebauten Schuldenberge abtragen und die Arbeitslosigkeit reduzieren zu können, verfügen...

We assess the effects on trade balance of a temporary fiscal devaluation enacted by Spain or Portugal by simulating EAGLE, a large-scale multi-country dynamic general equilibrium model of the euro area. Social contributions paid by firms are reduced by 1 percent of GDP for four years and are...

Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital...

This paper evaluates different options of labour market policy and tax reform with payroll tax reductions for the Spanish economy in the current situation of high unemployment and debt constraints for public and private households. The Spanish economy in the aftermath of the Great Recession is...

Member countries of the euro area, and the peripheral states in particular, face an especially difficult problem: on the one hand, they urgently need stronger economic growth to reduce high debt and unemployment levels. On the other hand, however, they have no scope to use fiscal policy to...

Member countries of the euro area, and the peripheral states in particular, are faced with an especially difficult problem: on the one hand, they urgently need stronger economic growth to pay off the mountains of debt they have accrued and have to reduce unemployment but, on the other hand, they...

Using a DSGE model calibrated to the euro area, we analyze the international effects of a fiscal devaluation (FD) implemented as a revenue-neutral shift from employer's social contributions to the Value Added Tax. We find that a FD in ‘Southern European countries’ has a strong...

Between 1999 and the onset of the economic crisis in 2008 real ex-change rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange...

We study the potential impact of fiscal devaluation policies on the Italian economy using IGEM, a dynamic general equilibrium model for the Italian economy developed at the Department of Treasury of the Italian Ministry of the Economy and Finance. The simulations show that fiscal devaluation...

Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital...

We assess the effects on trade balance of a temporary fiscal devaluation enacted by Spain or Portugal by simulating EAGLE, a large-scale multi-country dynamic general equilibrium model of the euro area. Social contributions paid by firms are reduced by 1 percent of GDP for four years and are...

In recent years, the concept of a fiscal devaluation has been advocated as fiscal policy alternative to nominal exchange rate devaluations for peripheral deficit countries in the euro area to regain competitiveness. This paper investigates if countries in the euro area implemented fiscal...

We study the potential impact of fiscal devaluation policies on the Italian economy using IGEM, a dynamic general equilibrium model for the Italian economy developed at the Department of Treasury of the Italian Ministry of the Economy and Finance. The simulations show that fiscal devaluation...

Between 1999 and the onset of the economic crisis in 2008 real ex-change rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange...

Between 1999 and the onset of the economic crisis in 2008 real exchange rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange rate...

Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital...

Between 1999 and the onset of the economic crisis in 2008 real ex-change rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange...

Die Mitgliedsländer der Eurozone, vor allem die sogenannten Peripheriestaaten, stehen vor einem schwer zu lösenden Problem: Einerseits benötigen sie dringend ein stärkeres Wirtschaftswachstum, um die aufgebauten Schuldenberge abtragen und die Arbeitslosigkeit reduzieren zu können, verfügen...

Between 1999 and the onset of the economic crisis in 2008 real exchange rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange rate...

Between 1999 and the onset of the economic crisis in 2008 real exchange rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange rate...

We use a small open economy general equilibrium model to analyse the effects of a fiscal devaluation in an EMU country. The model has been calibrated for the Spanish economy, which is a good example of the advantages of a change in the tax mix given that its tax system shows a positive bias in...