Strategic interactions of fiscal policies in Europe: A global VAR perspective

Catalin Dragomirescu-Gaina and Dionisis Philippas

Journal of International Money and Finance, 2015, vol. 59, issue C, 49-76

Abstract: The paper analyses the strategic interactions of fiscal policies in the European Union context, by modelling the interdependencies arising between public and private sectors' saving–investment balances. In a global vector autoregressive framework, we use two empirical specifications to reflect some important differences in the sequencing of the policy decision-making process. In this setting, we draw policy implications with respect to fiscal policy coordination and fiscal policy discretion. We highlight the importance of several factors such as global capital flows, uncertainty with respect to policy actions and nature of the shocks, as key elements defining the dimension of the prevailing policy tradeoffs.

Keywords: Discretion; Coordination; Saving–investment balances; Capital flows; Global VAR (search for similar items in EconPapers)
JEL-codes: E61 F15 F42 H60 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:59:y:2015:i:c:p:49-76

DOI: 10.1016/j.jimonfin.2015.06.001

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