The future of built-in stabilizers is currently a matter of concern due to the various challenges arising from the processes of fiscal consolidation, international integration and the reflux from the welfare state. The book gathers relevant material for assessing the issue from both theoretical and empirical research.
This volume describes the stabilization properties of fiscal policies on business cycles and growth within dynamic equilibrium models. It also gives attention to automatic stabilization within an Economic Union. Both the loss of control over monetary policy and the restraints on the use of fiscal policy for countries entering the EMU are sources of concern about the possibilities of stabilizing fluctuations affecting the members of the Union.
Furthermore, attention is given to stabilization and labour market policies. The contribution of labor market institutions to automatic stabilizers is often advocated. Post World War II institutions have brought protection to employment, wages and unemployed substitution revenues which involve stabilization of actual income. Recent institutional changes towards more labor market flexibility, mainly motivated by efficiency purposes, may be costly in terms of stabilization.
The final part is on empirical evidence, recent trends and problems in stabilization. It is devoted to empirical studies of the stabilization effect of alternative fiscal policies, emphasizing the experience of European countries in the 1990s.
Ousted from popularity in the 1970s because of their Keynesian foundations, then resurrected in subsequent recessions, automatic stabilizers to maintain economic stability are addressed by 31 attendees of a 1996 Paris conference (nine North American, the rest European). Research challenges pivot on the extent to which the behavioral foundations of these mechanisms match theory, and how built-in stabilizers interplay with other fiscal factors. Four major sections encompass: fiscal policies, business cycle, and growth; automatic stabilizers in an economic union; stabilization and labor market policies; and empirical evidence, recent trends, and problems on stabilization. Annotation c. by Book News, Inc., Portland, Or.
Introduction; J.-O. Hairault, et al. Part I: Fiscal Policies, Business Cycle and Growth. 1. An Exploration Into the Effects of Dynamic Economic Stabilization; J. Dolmas, G.W. Huffman. 2. Optimal Public Spending in a Business Cycle Model; S. Ambler, E. Cardia. 3. Welfare, Stabilization or Growth: A Comparison of Different Fiscal Objectives; S.P. Cassou, K.J. Lansing. 4. Public Investment, Stabilization and Growth; F. Collard. Part II: Automatic Stabilizers in an Economic Union. 5. Monetary Union and the Role of Automatic Stabilizers; K.M. Kletzer, W.H. Buiter. 6. The Efficiency of National and Regional Stabilization Policies; T. Bayoumi, P.R. Masson. 7. Insurance Against Asymmetric Shocks in a European Monetary Union; J. von Hagen, G.W. Hammond. 8. Automatic Stabilizers in a European Perspective; F. Bec, J.-O. Hairault. Part III: Stabilization and Labour Market Policies. 9. The Cyclical Effects of Labour Market Policy; S.P. Millard. 10. Financing Unemployment Benefits in the Business Cycle: Stabilization, Welfare and Equity Issues; J.-O. Hairault, et al. Part IV: Empirical Evidence, Recent Trends and Problems on Stabilization. 11. Are Automatic Stabilizers Still Effective? The French Case in the Nineties; J.-P. Cotis, et al. 12. Output Stabilization Versus Deficit Sustainability: Is It a Trade- Off? B. Candelon, P.-Y. Hénin. 13. The Effects of Fiscal Policy and The Maastricht Solvency Criteria on European Employment; R. Barrell, et al. 14. Macroeconomic Effects of Fiscal Restructuring in Europe; A.H. Bayer, et al. Index.