Some Cross-Country Evidence about Debt, Deficits and the Behaviour of Monetary and Fiscal Authorities

Jacques Melitz

No 1653, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper assesses how monetary authorities behave and how they interact. Pooled data for the 15 members of the European Union except Luxembourg and five other OECD countries serves to answer these questions. Three basic conclusions emerge. First, fiscal policy responds to the ratio of public debt to output in a stabilizing manner. Second, coordinated macroeconomic policy exists: easy fiscal policy leads to tight monetary policy, and easy monetary policy to tight fiscal policy. Third, both monetary and fiscal policy respond to the cycle in a stabilizing manner, but automatic stabilization through fiscal policy is much weaker than generally perceived. Expansion raises tax receipts but also government expenditures. The destabilizing response on the expenditure side is also extremely marked.

Keywords: Fiscal Policy; Monetary Policy; Policy Coordination; Public Debt (search for similar items in EconPapers)
JEL-codes: E60 E63 (search for similar items in EconPapers)
Date: 1997-05
References: Add references at CitEc
Citations: View citations in EconPapers (61)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1653 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:1653

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1653

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().