The fiscal developments around the global financial crisis of 2007-2009 and its aftermath are undoubtedly a major factor behind that comeback. The large fiscal stimulus packages adopted by many countries in the face of large adverse shocks have triggered an unusually heated debate among academics, ...

One of the most popular pieces of wisdom in economic policy is the idea that fiscal policy is more effective in a fixed exchange rate regime or a currency union than in a flexible exchange rate regime. In this paper we revisit the theoretical foundations of the conventional wisdom on the relative ...

Well before the Great Recession of 2009 put fiscal policy debates in the front burner commodity-exporting countries had to deal with important fiscal policy dilemmas stemming from revenue volatility and eventual depletion. Chilean policymakers have been at the forefront in this area since adopting a ...

Economic research on fiscal policy has shown that while developed economies tend to run countercyclical fiscal policies Latin American countries have been characterized by procyclical policies. One of the explanations given to this phenomenon is that high external debt causes severe constraints on the ...

This paper is about an economy in a liquidity trap that is an environment with a zero nominal interest rate deflationary pressures and subpar growth. The paper shows two fiscal policy multipliers in a relatively standard New Keynesian liquidity trap economy with taxation costs. It computes real ...

In the last decade the prices of nonrenewable resources which constitute a critical source of fiscal revenue in many Latin American and Caribbean countries recorded sharp swings correlated with economic growth developments in the world and in the region. Similar episodes in the past led to boom and ...

On 1 May 2010 the Greek Prime Minister George Papandreau announced a set of drastic austerity measures. May Day itself saw clashes between police and demonstrators. On 5 May a general strike paralyzed the country armed demonstrators fought street battles with police. A bank burned down and numerous ...

After two decades of relative neglect fiscal policy is back at the center of the economics research agenda. The fiscal developments around the global financial crisis of 2007–09 are undoubtedly a major factor behind that comeback. The large fiscal stimulus packages adopted by many countries in the ...

There is no consensus about the economic implications of real exchange rate (RER) misalignments. Some authors argue that keeping the real exchange rate away from its equilibrium level creates distortions in the relative prices of tradable and nontradable goods generating misleading signals to economic ...

One of the defining features of the financial crisis of 2008?09 has been its persistent impact on the U.S. labor market with the unemployment rate roughly doubling from early 2008 through mid2010. This has ignited an intense debate on the appropriate stimulus response of fiscal policy. The debate has ...