全球智库信息集成服务系统(G2TT): DP15309 On Public Spending and Economic Unions

G2TT

来源类型	Discussion paper
规范类型	论文
来源ID	DP15309
	DP15309 On Public Spending and Economic Unions
	Jaume Ventura; Fernando Broner; Alberto Martin
发表日期	2020-09-19
出版年	2020
语种	英语
摘要	We analyze the conduct of fiscal policy in a financially integrated union in the presence of financial frictions. Frictions create a wedge between the return to investment and the union interest rate. This leads to an over-spending externality. While the social cost of spending is the return to investment, governments care mostly about the (depressed) interest rate they face. In other words, the crowding out effects of public spending are partly "exported" to the rest of the union. We argue that it may be hard for the union to deal with this externality through the design of fiscal rules, which are bound to be shaped by the preferences of the median country and not by efficiency considerations. We also analyze how this overspending externality - and the unionís ability to deal with it effectively - changes when the union is financially integrated with the rest of the world. Finally, we extend our model by introducing a zero lower bound on interest rates and show that, if financial frictions are severe enough, the union is pushed into a liquidity trap and the direction of the spending externality is reversed. At such times, fiscal rules that are appropriate during normal times might backfire.
主题	Financial Economics ; International Macroeconomics and Finance ; International Trade and Regional Economics ; Macroeconomics and Growth ; Monetary Economics and Fluctuations ; Public Economics
关键词	Public spending Economic union Crowding out Financial frictions Spending externalities Fiscal coordination
URL	https://cepr.org/publications/dp15309
来源智库	Centre for Economic Policy Research (United Kingdom)
资源类型	智库出版物
条目标识符	http://119.78.100.153/handle/2XGU8XDN/544287
推荐引用方式 GB/T 7714	Jaume Ventura,Fernando Broner,Alberto Martin. DP15309 On Public Spending and Economic Unions. 2020.