Fiscal Interventions Research Articles

How State Interventions affect Municipalities Taking the Lead in Sustainability

The state and local governments throughout the United States interact within a complex system of multilevel governance to advance sustainability. However, we know little about what this hierarchical system of exchanges means for municipalities as they work to achieve energy efficient government operations. Drawing on a perspective of “contested federalism”, we examine how the transaction costs of state–local government relations affect the efforts of U.S. cities to lead by example and promote sustainability within their internal processes. We apply a Bayesian item response theory approach to assess the effects of state-level fiscal and policy interventions on municipal commitments to energy efficiency programs within their internal operations. Our findings suggest that increased fiscal support for state energy programs enhances municipal commitments to government focused energy efficiency. We also find a positive connection between state energy efficiency standards and municipal efforts to enhance energy efficiency within their internal operations. The alignment of state resources and policy efforts with municipal actions can reduce commitment and agency costs that obstruct policy outcomes. The findings speak to the importance of multilevel governance exchanges in municipal efforts to become leaders in sustainability.

A Decade of Impact of Monetary Policy on Food Inflation: An Overview and Future Direction

This article presents a systematic literature review spanning the decade of 2010–2020 in a thematic fashion. It provides an in-depth analysis of how monetary policy regimes are responding to food inflation. It discusses about factors driving food inflation and the manner in which efficiency of financial markets facilitate policy transmission. Further, it explains how food insecurity is exacerbated by rise in food prices and the way high-income countries protect their farmers through input subsidies, indirectly contributing to global food price hike. It also argues that a strong monetary policy credibility can lend stationarity and mean-reversion to inflation rates. Next, it discusses the issues faced by central banks in measurement of inflation such as conflict of choice in different inflation measures and supply side constraints ranging from high farm-to-fork mark-ups to cartelization and hoarding. In subsequent section, it deals with the question whether to target headline or core inflation. After that, it presents a snapshot of various advanced and emerging countries operating their monetary policy in the presence of fiscal policy. It illustrates that the degree of fiscal intervention should be decided according to individual threshold of every country, taking into account the proportion of Ricardian and non-Ricardian population.

Ecological and Syndemic Predictors of Drug Use During Sex and Transactional Sex among U.S. Black Men Who Have Sex with Men: A Secondary Data Analysis from the HPTN 061 Study.

Threats to sexual health among U.S. Black men who have sex with men (MSM) may manifest in a context of social adverse experiences. Situational sex is one such context, which we characterize as sexual behaviors driven either by a desire to cultivate a specific sexual experience or attributable to social vulnerability. Two characterizations of situational sex explored in this study were drug use during sex and transactional sex. Guided by ecological and syndemic frameworks, we conducted a secondary data analysis of social conditions and sexual behaviors among a prospective cohort of Black MSM from the HIV Prevention Trial Network (HPTN) 061 study. Using structural equation modeling, this analysis examined the indirect effect of syndemic factors (substance use, depression, violence exposure) in the relationship between ecological constructs (anti-Black/homophobic stigma, childhood violence, and economic vulnerability) and situational sex (drug use during sex, transactional sex). Model fit indices, CFI (.870) and SRMR (.091), demonstrated reasonable fit. Significant indirect effects emerged via substance use for economic vulnerability (indirect effect = .181, 95% CI [.078, .294]) and anti-Black/homophobic violence and stigma (indirect effect = .061, 95% CI [.008, .121]) on drug use during sex; as well as on transactional sex (economic vulnerability indirect effect = .059, 95% CI [.018, .121] and anti-Black/homophobic stigma and violence indirect effect = .020, 95% CI [.003, .051]). Findings implicate the need for social and fiscal intervention to address upstream, ecological, and syndemic factors that influence inherent vulnerability of situational sex and overall threats to sexual health among Black MSM.

The effects of fiscal policy shocks on macroeconomic variables in developing countries : a meta-analysis of the DSGE literature

No AccessThe effects of fiscal policy shocks on macroeconomic variables in developing countries : a meta-analysis of the DSGE literature Adem Feto M.K. Jayamohan Arnis Vilks Adem Feto0 Search for more papers by this author M.K. Jayamohan0 Search for more papers by this author Arnis Vilks1 Search for more papers by this author Affiliations 0Bahir Dar University, Ethiopia 1Graduate School of Management, Germany Published Online:1 Mar 2021https://hdl.handle.net/10520/ejc-aa_ajber_v16_n1_a1SectionsPDF ToolsAdd to favouritesDownload CitationsTrack Citations ShareShare onFacebookTwitterLinked InRedditGMailHotmailYammer AboutAbstractStabilization of the economy through fiscal policies has been a broadly discussed subject over many decades. It gained momentum again after the 2008 global recession and is of utmost interest with regard to the COVID-19 crisis. The purpose of this paper is to examine the effects of fiscal policy on output and inflation. The data used to conduct the meta-analysis consist of empirical and calibrated fiscal impulse values of Dynamic Stochastic General Equilibrium studies and databases. An increase in fiscal policy shock by one percent leads to a one-period rise in output and inflation by 0.104 and 0.03 percent. Studies that employ the Bayesian method deliver higher effect. The interaction of fiscal impulse and interest jointly affect the output. Fiscal policy intervention in investment has more effect on growth than inflation-friendly government consumption. This study would help policy makers design stabilization strategies, and researchers to further investigate the subject matter and reconcile the contradictory conclusions of previous studies. Next article FiguresReferencesRelatedDetails None Volume 16, Issue 1 | Mar 2021 AffiliationAdonis & Abbey PublishersThe International Bibliography of Social Sciences (IBSS)EnglishBusiness and FinanceInternational JournalsAccreditationThe International Bibliography of Social Sciences (IBSS)LanguagesEnglish InformationCopyright © 2021, Adonis & Abbey Publishers:All rights reservedKeywordsDSGE modelDeveloping countriesFIVMeta-analysisFiscal policy Disclosure The authors confirm that the manuscript has been read and approved by all named authors and that there are no other persons who satisfied the criteria for authorship but are not listed. The authors confirm that they have given due consideration to the protection of intellectual property associated with this work and that there are no impediments to publication, including the timing of publication, with respect to intellectual property. Ethical conduct of research The authors state that they have obtained appropriate institutional review board outlined in the Declaration of Helsinki for all human or animal experimental investigations. A signed informed consent document has been obtained from all participants included in the study.

Age, Industry, and Unemployment Risk During a Pandemic Lockdown

This paper models the macroeconomic and distributional consequences of lockdown shocks during the COVID-19 pandemic. The model features heterogeneous life-cycle households, labor market search and matching frictions, and multiple industries of employment. We calibrate the model to data from New Zealand, where the health effects of the pandemic were especially mild. In this context, we model lockdowns as supply shocks, ignoring the demand shocks associated with health concerns about the virus. We then study the impact of a large-scale wage subsidy scheme implemented during the lockdown. The policy prevents job losses equivalent to 6.5% of steady state employment. Moreover, we find significant heterogeneity in its impact. The subsidy saves 17.2% of jobs for workers under the age of 30, but just 2.6% of jobs for those over 50. Nevertheless, our welfare analysis of fiscal alternatives shows that the young prefer increases in unemployment transfers as this enables greater consumption smoothing across employment states.

Fiscal Relations, Class Politics, and the Election Year in Ghana’s COVID-19 Context

In Ghana, West Africa, the rise of the COVID-19 pandemic coincided with the national election year. This paper analyses the intersection of pandemic-related fiscal interventions and the electoral calendar, analysing how this temporal confluence shaped the kind of mechanisms of redistribution adopted during the pandemic. The NPP government, known for its right-leaning ‘pro-business’ approach to economic policy-making, designed fiscal interventions that did not effectively address the lower-income sectors of the society, while some of these interventions, including 50% subsidy of water and electricity bills for businesses, appealed to their elite and middle-class voting base. Combining insights from the anthropology of tax and macroeconomics, we raise broader questions about the diversity of tools needed to effectively combat multi-dimensional poverty in Ghana, including the role of direct cash transfers. Ultimately, we argue that Ghana’s pandemic-related fiscal interventions speak to the historical class politics at the heart of state-citizen fiscal relations.

Why Has the COVID-19 Pandemic Had a Limited Impact on the Primary Housing Market in Poland?

In this paper we present the first insights into the as yet unexamined impact of the COVID-19 pandemic on the primary housing market in Poland, with a focus on Warsaw, which is the largest real estate market in the country. We explain the structural features that allowed the market to return to pre-shock levels after the pandemic shock. After the 2007–2008 global financial crisis the negative consequences lasted for several years. This time a sharp monetary policy and fiscal intervention was carried out. Moreover, the developer sector has expanded its production capacity. We show empirically that through monopolistic competition developers were able to restrict the excessive demand that was observed before the COVID-19 pandemic broke out. Another important structural change was the increase in the demand for housing, mainly for investment purposes, which was financed predominantly with cash and contributed to the growth of the rental market.

Macroprudential Policy during COVID-19: The Role of Policy Space

This paper uses the initial phase of the COVID-19 pandemic to examine how macroprudential frameworks developed over the past decade performed during a period of heightened financial and economic stress. It discusses a new measure of the macroprudential stance that better captures the intensity of different policies across countries and time. Then it shows that macroprudential policy has been used countercyclically—with stances tightened during the 2010’s and eased in response to COVID-19 by more than previous risk-off periods. Countries that tightened macroprudential policy more aggressively before COVID, as well as those that eased more during the pandemic, experienced less financial and economic stress. Countries’ ability to use macroprudential policy, however, was significantly constrained by the extent of existing “policy space”, i.e., by how aggressively policy was tightened before COVID-19. The use of macroprudential tools was not significantly affected by the space available to use other policy tools (such as fiscal policy, monetary policy, FX intervention, and capital flow management measures), and the use of other tools was not significantly affected by the space available to use macroprudential policy. This suggests that although macroprudential tools are being used countercyclically and should therefore help stabilize economies and financial markets, there appears to be an opportunity to better integrate the use of macroprudential tools with other policies in the future.

Wyzwania polityki fiskalnej dla państw Unii Europejskiej w dobie pandemii COVID-19

The aim of the article is to explore the size and the structure of fiscal packages, implemented in response to the crisis caused by COVID-19, from the point of view of their impact on the security and stability of public finance. The first section provides an overview of the economic theory on the role of fiscal policy, including the causes of fiscal intervention. Next, difficulties in conducting fiscal policy under the conditions of pandemic are presented. In addition, fiscal instruments and their size are analysed in the context of their influence on budget results. In conclusion, it is claimed that fiscal packages should be temporary and targeted in order not to create a permanent burden on public finance, ensuring budget neutrality in the medium term. The empirical analysis expands the current knowledge on potential effects of fiscal policy implemented under the crisis conditions and low interest rates, when macroeconomic stabilisation can only be ensured through fiscal policy instruments, despite the accompanying fiscal costs related to the increase in public debt.

Mobility choices and climate change: Assessing the effects of social norms, emissions information and economic incentives

The potential of psychological and fiscal framing interventions in motivating environmentally responsible behavior is explored in a context of long distance leisure travel. A series of discrete choice experiments is conducted with 789 participants. Framing conditions like information on CO2 emissions, an injunctive and a descriptive norm, fiscal incentives such as a carbon tax, a bonus-malus and a personal carbon trading scheme are tested while controlling the usual travel price-duration tradeoff. Pricing (including internalization of social cost of CO2 through fiscal incentives) has the expected effect of reducing the choice of travelling and hence CO2 emissions. Providing information on CO2 emissions of each transport alternative significantly reduces preferences for the most emitting modes (air) and favors a less emitting mode (train). Framing the fiscal incentive as personal carbon trading adds a moderate incentive to the price effect in reducing air choice.

The Economic Consequences of COVID-19: The Great Shutdown and the Rethinking of Economic Policy

This article examines the implications of the COVID-19 economic crisis for macroeconomic policy, and the roles of the State and the Fed and monetary policy in the United States economy. It argues that that the main effect will be to reinforce trends that had begun during the 2008 Great Recession in terms of the increasing relevance of counter-cyclical fiscal policies and monetary policy. The scale of fiscal policy responses needed to address the present crisis will have significant implications for the size of fiscal deficits and the federal debt, and are, therefore, likely to face political resistance and calls for fiscal austerity. Not only higher levels of deficits and debt will be necessary, but to some degree planning, not just to deal with pandemics, might become more relevant. Geopolitical concerns, aggravated by the pandemic will be another significant factor contributing to the growing role of the state. The financing needs of the fiscal interventions will in turn reinforce trends with respect to the role of the Fed as the fiscal agent of the Treasury that had been previously witnessed during the Great Depression and the 2007–9 Great Recession.

Sustainable health equity: achieving a net-zero UK

Sustainable health equity: achieving a net-zero UK

Research on the Impact of Financial Development on TFP——DEA-Malmquist Index and Hansen Threshold Model Based on Panel Data of Shandong Province, China

Shandong’s TFP growth is higher than Chinese average, but the growth rate has slowed in recent years, appearing the phenomenon that the growth momentum of Shandong’s TFP is insufficient. Using DEA-Malmquist Index to measure Shandong’s TFP growth rate, empirical research from the perspective of financial development finds that financial scale, efficiency of financial institutions, fiscal intervention, and scale of foreign capital utilization have significant nonlinear effects on the growth of TFP. Furtherly, through threshold analysis, the efficiency of financial institutions has a significant threshold effect on TFP growth. Financial scale and fiscal intervention are the main core variables that affect the growth of TFP under the threshold effect, and they have the same effect direction on TFP before and after the threshold value. However, the effect intensity of these two core variables on TFP is different.

A neurobehavioral study on the efficacy of price interventions in promoting healthy food choices among low socioeconomic families

Given the healthcare costs associated with obesity (especially in childhood), governments have tried several fiscal and policy interventions such as lowering tax and giving rebates to encourage parents to choose healthier food for their family. The efficacy of such fiscal policies is currently being debated. Here we address this issue by investigating how behavioral and brain-based responses in parents with low socioeconomic status change when rebates and lower taxes are offered on healthy food items. We performed behavioral and brain-based experiments, with the latter employing electroencephalography (EEG) acquired from parents while they shop in a simulated shopping market as well as follow up functional magnetic resonance imaging (fMRI) in the more restricted scanner environment. Behavioral data show that lower tax and rebate on healthy foods increase their purchase significantly compared to baseline. Rebate has a higher effect than lower tax treatment. From the EEG and fMRI experiments, we first show that healthy/unhealthy foods elicit least/maximal reward response in the brain, respectively. Further, by offering lower tax or rebate on healthy food items, the reward signal for such items in the brain is significantly enhanced. Second, we demonstrate that rebate is more effective than lower tax in encouraging consumers to purchase healthy food items, driven in part, by higher reward-related response in the brain for rebate. Third, fiscal interventions decreased the amount of frontal cognitive control required to buy healthy foods despite their lower calorific value as compared to unhealthy foods. Finally, we propose that it is possible to titrate the amount of tax reductions and rebates on healthy food items so that they consistently become more preferable than unhealthy foods.

Sustainable Development and Crude Oil Revenue: A Case of Selected Crude Oil-Producing African Countries.

This study investigated the relationship between sustainable development and crude oil revenue (COR) in selected oil-producing African countries from 1992–2017 using the Pooled Mean Group (PMG) estimators on panel autoregressive distributed lag model (ARDL). Sustainable development was measured with the Human Development Index (HDI). This study was significant for Africa to break away from fiscal over-dependence on natural resource revenue, especially crude oil due to its high volatility and to correct porous institutional outlook. The a priori expectation is that crude oil revenue will tank so much that many countries will record negative positions and might not be to meet fiscal demands in the long run if the situation is protracted. Empirical results revealed that there was no long-term relationship between COR and sustainable development. In other words, the results suggest that any changes to COR have a potential negative effect on sustainable development in the selected countries. This implies over-reliance on COR will impact the economies negatively in the long run. This finding, therefore, requires an immediate fiscal intervention on spending on sustainable development drivers such as education, health, agriculture cum adoption diversification policy, and veritable supply-side policies that could avert the possibility of these negative effects and to correct traits of ineffective public institution. The absence of such policy interventions in these countries seems to be related to ineffective public institution and bad governance, culminating from poor, ineffective, and inefficient implementation.

Effect of subsidies on healthful consumption: a protocol for a systematic review update

IntroductionThe prevalence of diet-related non-communicable diseases (NCDs) are rapidly increasing in most parts of the world. In order to ameliorate the related public health burden, evidence-informed policies to improve diet...

CBN Monetary Policy and Inflation Nexus in Nigeria: An empirical approach

Purpose: The study explored monetary policy effect on inflation stabilization in Nigeria. Increasing levels of indebtedness may have reduced the fiscal space for fiscal policy intervention and this leaves monetary policy as the real tool of choice for macroeconomic stabilisation. The question we need to ask then is, how effective is this tool of choice?Methodology: Monthly time series data from 2009-2018 were used in estimating the model. The ADF test for the stationarity, the johansen cointegration test and the vector error correction model were utilized in testing the variables. The findings from the unit root test did indicate stationarity at first difference 1(1). The cointegration (Johansen) test indicates that there was a nexus linking inflation and all the regressors adopted in the long term.Findings: The result of the VECM for the two estimated models shows a self-equilibrating mechanism of 14 per cent and 32 per cent for the first and second models respectively. The findings further reveal that the variables; liquidity ratio, policy rate (MPR), exchange rate, reserve requirement and treasury bills rate all had an effective impact on the inflation rate and that that effect was very significant. Hence, the CBN's monetary policy shocks do seem to have the expected traction on the Nigerian economy.Unique Contribution: The results make it pertinent for the CBN to utilize all the policy measures adopted in order to keep inflation within acceptable thresholds and prepare to keep inflation within the targeted range of 6-9 per cent, no matter the anticipated or unanticipated strong head winds.

Monetary policy and financial economic growth

In this paper, we investigate the effectiveness of monetary policy in a modified neoclassical economic growth framework. We extend a two-asset model to a three-asset one by adding the bond market under the variation of parameters and show that the impact of monetary expansion on inflation is complete in the two-asset model but is not complete in the three-asset model. Moreover, we find that in both of these models, the impact of monetary policy (or equivalently inflation) on the economic growth is ambiguous due to the fiscal policy intervention, and public expectations play crucial roles for the effectiveness and transmission of monetary policy in economic growth models. Finally, we show that our models are stable.

Sweetened beverage taxes and changes in beverage price, imports and manufacturing: interrupted time series analysis in a middle-income country

BackgroundThe Pacific Island nation of Tonga (a middle-income country) introduced a sweetened beverage tax of T$0.50/L in 2013, with this increasing further in 2016 (to T$1.00/L), and in 2017 (T$1.50/L; US$0.02/oz). Given the potential importance of such types of fiscal intervention for preventing chronic disease, we aimed to evaluate the impact of these tax changes in Tonga.MethodsInterrupted time series analysis was used to examine monthly import volumes and quarterly price and manufacturing 1 year after each tax change, compared with a counterfactual based on existing trends. Autocorrelation was adjusted for when present, and adjustments were made for changes in GDP per capita, visitor numbers, season and T$/US$ exchange rate.ResultsIn the year after the 2013, 2016 and 2017 tax increases, the price of an indicator soft drink increased by 16.8% (95%CI: 6.3 to 29.6), 3.7% (− 0.6 to 8.3) and 17.6% (6.0 to 32.0) respectively. Imports of sweetened beverages decreased with changes of − 10.4% (− 23.6 to 9.0), − 30.3% (− 38.8 to − 20.5) and − 62.5% (− 73.1 to − 43.4) respectively. Juice imports changed by − 54.2% (− 93.2 to − 1.1), and sachet drinks by − 15.5% (− 67.8 to 88.3) after the 2017 tax increase. Tonga water bottling (T$) increased in value by 143% (69 to 334) after the 2016 tax increase and soft drink manufacturing increased by 20% (2 to 46, albeit 5% market share).ConclusionsConsistent with international evaluations of sugar-sweetened beverage taxes, the taxes in Tonga were associated with increased prices, decreased taxed beverages imports, and increased locally bottled water.

Interaction Effect of Lockdown with Economic and Fiscal Measures against COVID-19 on Social-Distancing Compliance: Evidence from Africa

The objective of this paper is to assess the impact of lockdown on human mobility based on a sample of Africa countries. Using a difference-in-difference (DiD) approach we find that lockdown causes a sharp decline in people's movement suggesting high compliance with social distancing requirements in countries under lockdown. Following the lockdown, workplace visits decrease by nearly 14 points of percentage in comparison to the baseline. We observe a similar decline concerning the visits in retail and recreation places or groceries and pharmacies. Inversely, the time spent at home increase by 6 points of percentage. These findings suggest that compliance with social-distancing requirements is higher in countries applying strict containment measures. More interestingly, this paper provides evidence that people's compliance with social-distancing measures is higher when combining lockdown measures with economic and fiscal interventions. We also find that access to the internet or increasing acquisition information about COVID-19 amplifies compliance with stay-at-home orders.