Niko Gobbin

Monetary and fiscal policy transmission in the Euro-area: evidence from a structural VAR analysis

This paper studies the transmission of monetary and fiscal policy in the Euro-area. To do so, structural VAR models are estimated. First, the EMU countries are considered as an aggregate entity and the estimation results are compared with those for the US and Japan. Attention is also paid to interaction of macroeconomic policies and the effects of shocks in financial markets. As a next step, SVARs are estimated for the individual EMU countries to analyze cross-country differences. It turns out that, compared to the EMU aggregate, individual EU countries react rather differently to monetary and fiscal policy shocks.

Fiscal Adjustments and Their Effects during the Transition to the EMU

The transition phase to EMU hasbeen accompanied by considerable monetaryand fiscal consolidation efforts in the EU.This paper analyses this consolidationprocess and its effects on economicactivity in the EU. It is tested to what extent fiscal retrenchment efforts havedepressed or stimulated private spending. Inthe case of the latter non-Keynesian effectsdominate the traditional Keynesianexpenditure effects of government spending,taxation and transfer payments.

Inequality and Growth: From Micro Theory to Macro Empirics

To establish the nature of the link between income distribution and economic growth by means of a standard growth regression, one needs to collapse an entire income distribution into a scalar measure of inequality. Due to data shortages macro-economic research has typically been forced to use the gini coefficient for this purpose. Using a simulation set up we check how well different measures of inequality or poverty succeed in detecting the correct relationship. We find that the gini coefficient might not be the worst of choices, but the comparison of the explanatory power of different inequality measures can help to identify the theoretical mechanism through which inequality affects growth.

Different ways of looking at old issues: a time-series approach to inequality and growth

In this article we propose an econometric approach that steers clear of parameter heterogeneity, omitted variable bias and endogeneity problems, from which suffers the econometric analysis of economic growth. We propose to investigate the relation between income inequality and economic growth in a cointegrated VAR setting and present an application to Belgium, US and Finland.

The Russian crisis: a debt perspective

On 17 August 1998 the Russian authorities devalued the ruble, suspended repayments of ruble-denominated government paper and announced a moratorium on the Russian foreign debt. By doing so the government brought the domestic banking sector to the edge of bankruptcy and risked losing the little international faith still remaining in its abilities to restructure the economy. In this article we examine the deeper causes of the crisis. After having analysed its antecedents we gather our new insights into a basic stylised model of the crisis. The outcome of the model is then linked to the actual data and events.

Budgetary stabilisation and the level of public debt

In this chapter we look into the interaction between the level of government debt and the effects of fiscal policy on private consumption in a number of EU-15 countries. Hence, the chapter somewhat deviates from other chapters in the book: We do not focus on economic spillovers between countries, but remain within the country borders. The questions we address are nonetheless valuable ones to evaluate policy coordination. If the transmission of fiscal policy actions depends on the debt level, a common EU-wide fiscal action will differently affect the individual Member States. Or put differently, to achieve a common goal different actions are needed. In addition, a common fiscal target, such as the Maastricht deficit criterion, might be harder to achieve in a country with a higher or lower initial government debt level. On the other hand, dependence of fiscal transmission on the debt level might also be seen as an additional rationale for the debt convergence criterion.