Carmen Gómez

Similarities and Differences in the Composition of Public Expenditures in the European Union

The European Union (EU) is putting emphasis on the need to change the composition of public expenditures to what, according to the public policies endogenous models, is considered a high quality of public finances (i.e., a higher share of productive expenditures). These recommendations are the same for all EU member states. Together with the fiscal requirements arising from the Maastricht Treaty and the Stability and Growth Pact, EU authorities are promoting a one-size-fits-all fiscal policy model. Our paper analyzes the differences existing in the composition of public expenditures in the EU. If this composition is significantly different, that would mean that in the EU there are differences in the national preferences about the role/size of public expenditures, something that would not allow implementing a single model of public sector and fiscal policy.

Is the composition of public expenditures converging in EMU countries

The literature on fiscal policy is paying increasing attention to the impact of the composition of public expenditures on long-term economic growth. Public policy endogenous growth models recommend to change the composition of public expenditures to items considered as productive expenditures. Based on these models, European institutions are encouraging to increase the share of outlays, such as public investments, research and development, active labor market policies, and so on. This paper analyzes whether a convergence to a new pattern of public finances with a higher share of productive expenditures is arising in the euro zone.

Fiscal Adjustment and Composition of Public Expenditures in the EMU

The rules and norms set out in the Maastrich Treaty and in the Stability and Growth Pact (SGP) have involved for the European Monetary Union (EMU) member states the implementation of an orthodox strategy of fiscal policy based on the correction of fiscal imbalances and cuts in the current sizes of public revenues and expenditures.

The impact of the financial and economic crises on European Union member states

Although the Great Recession is a global phenomenon, with roots outside the European Union (EU), its impact has been deeper and longer lasting in the EU than elsewhere. However, the impact of the Great Recession has not been the same in all the European countries. The objective of this chapter is to analyse the different effects of the economic and financial crisis among the European Union member states, focusing on the behaviour of a number of real and financial variables since the year 2003 to evaluate the impact of the crisis. Thus, we will analyse the performance of 17 economic variables grouped into seven categories: economic activity, labour market, income distribution, inflation, balance of payments, public finances, and financial balance sheets of total economy and sectors.

Is Wages Policy on the Agenda of Trade Unions Again? Voluntary Wage Moderation in Spain:

This article analyses the Spanish experience with voluntary wage moderation, focusing on the differences between the current model of wage moderation that began in 1997 and the traditional model of wages policies and social pacts implemented between 1977 and 1986. The article stresses the importance of changes in the economic and political environment and in the attitudes of unions towards the effectiveness and suitability of wage moderation as a tool to solve micro- and macroeconomic problems, to explain the abandonment of wages policies and then their renaissance in the late 1990s.

The Pattern of Inward FDI Geographical Distribution: Can Developing Countries Base Their Development on Those Flows?

Developing economies have been recommended strongly since the 1980s by international organizations (WB, WTO, IMF, UNCTAD) to rely primarily on foreign direct investment (FDI) as a source of external funds and as an engine for growth. It is argued that FDI is superior to other types of capital flows, acting as a kind of ‘good cholesterol’, because it offers to the host country not just less volatile financial resources but also a bundle of important assets for growth: access to modern technology, and know-how. This recommendation has been general to all the developing economies, without taking into account their structural differences. The success of some Latin-American and South-East Asian economies would be examples to be imitated.

Financialization and the Financial Balance Sheets of Economic Sectors in the Eurozone

The process of financial liberalization has given rise to a widespread financialization process in most developed economies and many emerging economies. One of the most striking features of this process is the huge increase recorded in the size of the financial balance sheets not only of the total economy but also of the different economic sectors (public and private, financial and non-financial ones). However, despite the generalized nature of this process, significant differences remain among countries, and these differences could help to explain the different economic performances of these countries. The chapter will analyse the behavior of the balance sheets of the private and public agents in the Eurozone member states. The main objectives of the chapter are to detect the existence of significant differences among countries in the evolution of the size of the financial sheets of the different agents and to analyse whether the financialization process has had an impact on the economic activity of Eurozone countries.

Is There a Role for Active Fiscal Policies? Supply-Side and Demand-Side Effects of Fiscal Policies

There is no doubt that the subject of fiscal policy has been, is, and, with complete certainty, will continue to be a recurrent subject in Malcolm Sawyer’s works. A great deal of his long-term research activity has been focused on the study of the economic impact of active fiscal economies and on the defence of the active role of fiscal policy from a double perspective. Firstly, as a tool of stabilising economic policy, correcting and compensating the disequilibrium generated by the fluctuations in economic activity, which are explained as a result of changes in the aggregate demand. Secondly, as part of an active policy aiming to reach and keep levels of economic activity, or in other words of aggregate demand, which permit reaching full employment.

The Global Financial Crisis and the Labour Markets in Europe: Do Labour Institutions Matter?

The Global Financial Crisis (GFC) has had a significant impact on the European labour markets. The objective of this chapter is to analyse whether this impact significantly differs among countries and the reasons behind these differences. We analyse to what extent the differences in the impact of the GFC on the economic activity explain the variation in performances of the European labour markets. Our analysis shows that although this impact is clear, other elements explain these differences. In the second part of the chapter, we study whether the presumed rigidities in the labour markets have contributed to the evolution of the employment and unemployment rates. We conclude that more rigid labour markets have not led to larger declines in employment and increases in unemployment rates, and that more flexible labour markets have contributed to a more rapid recovery of labour markets.

Sustainable Future Fiscal and Debt Policies: Lessons from and for Spain

Abstract The New Consensus Macroeconomics and the consequent macroeconomic policy strategy implemented before the current financial and economic crisis had downgraded the role of fiscal policy. Discretionary fiscal policy should be abandoned, leaving room only for the working of built-in stabilisers. Fiscal deficits had to be avoided, setting strict limits to the circumstances in which this fiscal imbalance could operate and to the maximum size of the fiscal deficit. However, this view has changed since the start of the crisis. Thus, recent research confirms the validity of the Keynesian arguments in favour of an active counter-cyclical fiscal policy and the problems generated by the fiscal austerity policies whose only objective is the drastic fall in fiscal imbalances. The objective of the chapter is to show the main principles and guidelines of what should drive the fiscal policy in Spain in the future.