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Fiscal councils and economic volatility
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SYSNO ASEP 0429460 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Fiscal councils and economic volatility Author(s) Geršl, A. (CZ)
Jašová, M. (CZ)
Zápal, Jan (NHU-C) RIDSource Title Finance a úvěr-Czech Journal of Economics and Finance. - : Univerzita Karlova v Praze - ISSN 0015-1920
Roč. 64, č. 3 (2014), s. 190-212Number of pages 23 s. Publication form Print - P Language eng - English Country CZ - Czech Republic Keywords dynamic inconsistency ; fiscal and monetary policy interaction ; independent fiscal council Subject RIV AH - Economics Institutional support NHU-C - PRVOUK-P23 UT WOS 000338186400001 EID SCOPUS 84902141178 Annotation We evaluate proposals for an independent fiscal authority put forward as a solution to excessive public spending. Our main conclusion is that shifting the responsibility to set broad measures of fiscal policy from the hands of the government to an independent fiscal council is not necessarily welfare improving. We show that the change is welfare improving if the ability of policymakers to assess the state of the economy does not change. How-ever, if this institutional change involves a considerable decrease of capacity of the new agency to recognize economic shocks, citizens’ welfare can decrease as a result. This is especially significant in times of increased economic volatility such as during the recent global financial crisis. Faced with the ambiguous theoretical result, we try to gain deeper insight by calibrating our simple model. Workplace Economics Institute - CERGE Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2015 Electronic address http://journal.fsv.cuni.cz/storage/1298_jasova.pdf
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