Special Issue "Effects of Fiscal and Monetary Policy in the Great Recession"

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A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: closed (30 November 2013)

Special Issue Editor

Guest Editor
Dr. Gonzalo Caballero (Website)

Faculty of Economics, University of Vigo, Lagoas Marcosende, 36310 Vigo, Spain
Interests: political economy; institutional analysis; development; public policies; institutionalism; natural resource economics; economics of fisheries

Special Issue Information

Dear Colleagues,

This Special Issue of Economies will include papers on economic policy and its effects in the Great Recession. Fiscal Policy and Monetary Policy have followed different patterns during the Great Recession and across countries. Moreover, an intense debate has emerged about the role of fiscal and monetary policy in the economic crisis, and the adequate mix between State and market is being analyzed when defining the institutional structure of governance of the XXI Century. The debate of the effects of fiscal and monetary policy is broad, and it includes different experiences since the US and the EU until the developing countries, for example. The papers can be theoretical or empirical, and the approach can be based on case study, comparative or institutional analysis, theoretical contributions, historical perspective or empirical work, among others. Papers from different schools of thought would be accepted too.

Dr. Gonzalo Caballero
Guest Editor

Submission

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. Papers will be published continuously (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are refereed through a peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Economies is an international peer-reviewed Open Access quarterly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. For the first couple of issues the Article Processing Charge (APC) will be waived for well-prepared manuscripts. English correction and/or formatting fees of 250 CHF (Swiss Francs) will be charged in certain cases for those articles accepted for publication that require extensive additional formatting and/or English corrections.

Keywords

  • great recession
  • economic policy
  • institutional reforms
  • governance
  • economic growth
  • economic and financial perspectives
  • fiscal multiplier
  • monetary policy

Published Papers (7 papers)

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Editorial

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Open AccessEditorial Effects of Fiscal and Monetary Policy in the Great Recession
Economies 2013, 1(2), 15-18; doi:10.3390/economies1020015
Received: 24 September 2013 / Accepted: 24 September 2013 / Published: 24 September 2013
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Abstract
World economy is living a time of change, and the complexity of change has implied a new research agenda on the role of economic policy in society. The role, types and effects of economic policy have been major issues in economic science [...] Read more.
World economy is living a time of change, and the complexity of change has implied a new research agenda on the role of economic policy in society. The role, types and effects of economic policy have been major issues in economic science since its origins. Jean Tinbergen (1956) [1] established the basis for the traditional theory of economic policy in economics and he tried to show how economic knowledge could be organized to regulate and guide economic systems. Nevertheless, this traditional approach has been improved through several contributions, for example when Eggertsson (1997) [2] incorporated the existence of incomplete knowledge, endogenous politics and institutional change in the theory of economic policy. [...] Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)

Research

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Open AccessArticle Household Debt and Consumption Inequality: The Spanish Case
Economies 2014, 2(3), 147-170; doi:10.3390/economies2030147
Received: 29 November 2013 / Revised: 4 July 2014 / Accepted: 9 July 2014 / Published: 21 July 2014
Cited by 1 | PDF Full-text (524 KB) | HTML Full-text | XML Full-text
Abstract
The aim of this paper is twofold. On the one hand, we attempt to find out whether Spanish households took part in a process of substituting loans for wages during the period before the beginning of the current economic crisis. On the [...] Read more.
The aim of this paper is twofold. On the one hand, we attempt to find out whether Spanish households took part in a process of substituting loans for wages during the period before the beginning of the current economic crisis. On the other hand, we try to identify the consequences of such process in the evolution of income and consumption inequalities. The theoretical framework to deal with the above mentioned issues is provided by a review of the economic literature on the determinants of consumer behaviour, namely, on consumption, saving and debt. The empirical study consists of a descriptive analysis, which is focused on two fields. First, we analyze the evolution of consumer credit (both, in aggregate and by income groups) and the savings rates. Second, we compare the values and temporal evolution of income and consumption inequalities. The period under study ranges from 2000 to 2008. Our analysis provides some empirical evidence that supports the hypothesis that financial conditions led to significant effects on the distribution of consumption. This influence is especially significant in the case of consumption inequalities. These inequalities were lower than income inequalities and were kept “artificially” low and stable during the whole period. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)
Open AccessArticle The Formation of New Monetary Policies: Decisions of Central Banks on the Great Recession
Economies 2014, 2(2), 109-123; doi:10.3390/economies2020109
Received: 17 December 2013 / Revised: 4 April 2014 / Accepted: 6 May 2014 / Published: 21 May 2014
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Abstract
The effect that the Great Recession had on monetary policies has led to the profound reorientation of central banks’ actions from 2007 to 2013. The purpose of this work is to analyze the monetary policies applied by the main central banks, mainly [...] Read more.
The effect that the Great Recession had on monetary policies has led to the profound reorientation of central banks’ actions from 2007 to 2013. The purpose of this work is to analyze the monetary policies applied by the main central banks, mainly the European Central Bank, the Federal Reserve System of USA and the Bank of Japan, in order to raise thoughts on the guidelines that central banks should follow in the future. In the first section the bases of monetary policy before the crisis are described; in the second we explain the change in the orientation of the role of central banks during the crisis; and finally, we synthesize the bases on which the economic debate is taking place on the orientation of future monetary policies. We conclude that, in so far as the inoperativeness of transmission mechanisms still persists, monetary policies will remain in a process of change. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)
Open AccessArticle Financial Markets, Banking and the Design of Monetary Policy: A Stable Baseline Scenario
Economies 2014, 2(1), 1-19; doi:10.3390/economies2010001
Received: 23 October 2013 / Revised: 9 December 2013 / Accepted: 10 December 2013 / Published: 30 December 2013
Cited by 1 | PDF Full-text (280 KB) | HTML Full-text | XML Full-text
Abstract
A baseline integration of commercial banks into the disequilibrium framework with behavioral traders of Charpe et al. (2011, 2012) is presented. At the core of the analysis is the impact the banking sector exerts on the interaction of real and financial markets. [...] Read more.
A baseline integration of commercial banks into the disequilibrium framework with behavioral traders of Charpe et al. (2011, 2012) is presented. At the core of the analysis is the impact the banking sector exerts on the interaction of real and financial markets. Potentially destabilizing feedback channels in the presence of imperfect macroeconomic portfolio adjustment and heterogeneous expectations are investigated. Given the possible financial market instability, various policy instruments have to be applied in order to guarantee viable dynamics in the highly interconnected macroeconomy. Among those are open market operations reacting to the state-of-confidence in the economy and Tobin-type capital gain taxes. The need for policy intervention is even more striking, as the banking sector is modeled in a rather stability enhancing way, fulfilling its fundamental tasks of term transformation of savings and credit granting without engaging in investment activities itself. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)
Open AccessArticle The Changing Effectiveness of Monetary Policy
Economies 2013, 1(3), 49-64; doi:10.3390/economies1030049
Received: 15 August 2013 / Revised: 29 October 2013 / Accepted: 30 October 2013 / Published: 13 November 2013
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Abstract
In the wake of the 2008 financial crisis, many countries are hoping that massive increases in their money supplies will revive their economies. Evaluating the effectiveness of this strategy using traditional statistical methods would require the construction of an extremely complex economic [...] Read more.
In the wake of the 2008 financial crisis, many countries are hoping that massive increases in their money supplies will revive their economies. Evaluating the effectiveness of this strategy using traditional statistical methods would require the construction of an extremely complex economic model of the world that showed how each country’s situation affected all other countries. No matter how complex that model was, it would always be subject to the criticism that it had omitted important variables. Omitting important variables from traditional statistical methods ruins all estimates and statistics. This paper uses a relatively new statistical method that solves the omitted variables problem. This technique produces a separate slope estimate for each observation which makes it possible to see how the estimated relationship has changed over time due to omitted variables. I find that the effectiveness of monetary policy has fallen between the first quarter of 2003 and the fourth quarter of 2012 by 14%, 36%, 38%, 32%, 29% and 69% for Japan, the UK, the USA, the Euro area, Brazil, and the Russian Federation respectively. I hypothesize that monetary policy is suffering from diminishing returns because it cannot address the fundamental problem with the world’s economy today; that problem is a global glut of savings that is either sitting idle or funding speculative bubbles. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)
Open AccessArticle Monetary Transfers in the U.S.: How Efficient Are Tax Rebates?
Economies 2013, 1(3), 26-48; doi:10.3390/economies1030026
Received: 17 August 2013 / Revised: 22 September 2013 / Accepted: 19 October 2013 / Published: 1 November 2013
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Abstract
Recent debate on the effectiveness of tax rebates has concentrated on the degree to which they can affect economic activity, which depends on the methodology, the state of the economy, and the underlying assumptions. A better approach to assess the effectiveness of [...] Read more.
Recent debate on the effectiveness of tax rebates has concentrated on the degree to which they can affect economic activity, which depends on the methodology, the state of the economy, and the underlying assumptions. A better approach to assess the effectiveness of these monetary transfers is by comparing this method to alternative policies—like the traditional monetary injections through the financial intermediaries. A limited participation model calibrated to the U.S. economy is used to show that the higher the proportion of the monetary injection channeled through the consumers—instead of banks—leads to a less vigorous recovery of output but softens the detrimental effect on the utility of the representative household from the inherent inflationary pressure. This result is robust to the relative importance of the injection (utilization of resources) and alternative utility functions. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)

Other

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Open AccessShort Note Effects of Fiscal Policy and Monetary Policy on the Stock Market in Poland
Economies 2013, 1(3), 19-25; doi:10.3390/economies1030019
Received: 16 July 2013 / Revised: 23 September 2013 / Accepted: 3 October 2013 / Published: 11 October 2013
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Abstract
The focus of this paper is to examine potential impacts of fiscal and monetary policies on stock market performance in Poland. Applying the GARCH model and based on a sample during 1999.Q2 to 2012.Q4, this paper finds that Poland’s stock market index [...] Read more.
The focus of this paper is to examine potential impacts of fiscal and monetary policies on stock market performance in Poland. Applying the GARCH model and based on a sample during 1999.Q2 to 2012.Q4, this paper finds that Poland’s stock market index is not affected by the ratio of government deficits or debt to GDP and is negatively influenced by the money market rate. The stock index and the ratio of M3 to GDP show a quadratic relationship with a critical value of 46.03%, suggesting that they have a positive relationship if the M3/GDP ratio is less than 46.03% and a negative relationship if the M3/GDP ratio is greater than 46.03%. Furthermore, Poland’s stock index is positively associated with industrial production and stock market performance in Germany and the U.S. and negatively affected by the nominal effective exchange rate and the inflation rate. Full article
(This article belongs to the Special Issue Effects of Fiscal and Monetary Policy in the Great Recession)

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