Christian Aubin

The Growth of Public Expenditure in France

Publisher Summary In France, as in most other industrialized countries, the growth of the public sector has become a strategic issue in the economic and political debate alongside traditional variables such as inflation and unemployment. This results from an almost continuous rise in the tax burden and the public sector share in the national product. This chapter provides an overview of the trends in public expenditure in France during the period 1961–1983. It discusses the changes in the following main characteristic ratios that highlights the behavior of the public sector in France since 1961: (1) the general government expenditure (GG) as a percentage of GDP ( Y ), and (2) the composition of general government spending by types of expenditure, consumption (GC), investment (GI), and transfers (GTR), and by sectors, central government (CG), local government (LG), and social security funds (SG). It also discusses the theoretical foundations of the estimated equations. These policy functions are based upon an extension of the median voter model. The functions try to go beyond the traditional approach proposed by Borcherding and try to explore the Borcherdings residual. The chapter presents the empirical analysis. It presents a justification of the choice of the dependent variables, rates of growth of nominal public expenditure, disaggregated by sectors and types, and the results. It also presents an analysis of the results, and reviews their significance and their explanatory power.

Stock prices, inflation and inflation uncertainty in the U.S.: testing the long-run relationship considering Dow Jones sector indexes

ABSTRACT We test for the long-run relationship between stock prices, inflation and its uncertainty for different U.S. sector stock indexes, over the period 2002M7–2015M10. For this purpose we use a cointegration analysis with one structural break to capture the crisis effect, and we assess the inflation uncertainty based on a time-varying unobserved component model. In line with recent empirical studies we discover that in the long run, the inflation and its uncertainty negatively impact the stock prices, opposed to the well-known Fisher effect. In addition we show that for several sector stock indexes the negative effect of inflation and its uncertainty vanishes after the crisis outburst. However, in the short run the results provide evidence in favour of a negative impact of uncertainty, while the inflation has no significant influence on stock prices, except for the consumption indexes. The consideration of business cycle effects confirms our findings, which proves that the results are robust, both for long- and short-run relationships.

Formation de la liquidité internationale et stabilisation du change dans un régime international bipolaire

The upsurge of the euro opens the possibility that two international currencies coexist. This paper focuses on the potential discordance between the demand and supply structures of international liquidity within a bipolar monetary regime. We show that the adjustment process intended to stabilize exchange rates is never neutral with respect to international liquidity. Controlling the effects of such a process on the dynamics of liquidity requires a specific rule between international currency issuers to share the burden of adjustment. Classification JEL : F33, F42