Domestic Politics and the International Coordination of Fiscal Policies
AbstractThis paper investigates the desirability of international fiscal policy coordination in the presence of a domestic political distortion. The domestic distortion results from the inability of the current policy-maker to enter into a binding agreement with future policy-makers about the composition of public spending. This distortion generates a bias towards budget deficits. International coordination can exacerbate this bias, and thus reduce social welfare at home and abroad. The reason is that international coordination enables the domestic and foreign governments to form a coalition that excludes future policy-makers. This international coalition reduces the cost of running a budget deficit, and thus enhances the adverse effects of the domestic political distortion.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 226.
Date of creation: Feb 1988
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Other versions of this item:
- Tabellini, Guido, 1990. "Domestic politics and the international coordination of fiscal policies," Journal of International Economics, Elsevier, vol. 28(3-4), pages 245-265, May.
- Guido Tabellini, 1988. "Domestic Politics and the International Coordination of Fiscal Policies," UCLA Economics Working Papers 529, UCLA Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giavazzi, Francesco & Pagano, Marco, 1986.
"The Advantages of Tying One's Hands: EMS Discipline and Central Bank Credibility,"
CEPR Discussion Papers
135, C.E.P.R. Discussion Papers.
- Giavazzi, Francesco & Pagano, Marco, 1988. "The advantage of tying one's hands : EMS discipline and Central Bank credibility," European Economic Review, Elsevier, vol. 32(5), pages 1055-1075, June.
- Francesco Giavazzi & Marco Pagano, 1991. "The Advantage of Tying One's Hands: EMS Discipline and Central Bank Credibility," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 303-330 National Bureau of Economic Research, Inc.
- Kenneth Rogoff, 1990.
"Equilibrium Political Budget Cycles,"
NBER Working Papers
2428, National Bureau of Economic Research, Inc.
- Svensson, Lars E O & Razin, Assaf, 1983. "The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 97-125, February.
- van der Ploeg, Frederick, 1988.
"International policy coordination in interdependent monetary economies,"
Journal of International Economics,
Elsevier, vol. 25(1-2), pages 1-23, August.
- van der Ploeg, Frederick, 1987. "International Policy Coordination in Interdependent Monetary Economies," CEPR Discussion Papers 169, C.E.P.R. Discussion Papers.
- Holmstrom, Bengt & Myerson, Roger B, 1983.
"Efficient and Durable Decision Rules with Incomplete Information,"
Econometric Society, vol. 51(6), pages 1799-819, November.
- Bengt Holmstrom & Roger B. Myerson, 1981. "Efficient and Durable Decision Rules with Incomplete Information," Discussion Papers 495, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Cukierman, Alex & Meltzer, Allan H, 1986. "A Positive Theory of Discretionary Policy, the Cost of Democratic Government and the Benefits of a Constitution," Economic Inquiry, Western Economic Association International, vol. 24(3), pages 367-88, July.
- Devereux, Michael, 1987. "Fiscal spending, the terms of trade, and real interest rates," Journal of International Economics, Elsevier, vol. 22(3-4), pages 219-235, May.
- Dornbusch, Rudiger, 1983.
"Real Interest Rates, Home Goods, and Optimal External Borrowing,"
Journal of Political Economy,
University of Chicago Press, vol. 91(1), pages 141-53, February.
- Rudiger Dornbusch, 1983. "Real Interest Rates, Home Goods, and Optimal External Borrowing," NBER Working Papers 0779, National Bureau of Economic Research, Inc.
- Buiter,Willem H. & Marston,Richard C., 1986.
"International Economic Policy Coordination,"
Cambridge University Press, number 9780521337809, November.
- J. David Richardson, 1987. "International Coordination of Trade Policy," NBER Working Papers 2293, National Bureau of Economic Research, Inc.
- Roland VAUBEL, 1985. "International Collusion or Competition for Macroeconomic Policy Coordination? A Restatement," Discussion Papers (REL - Recherches Economiques de Louvain) 1985031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Patrick J. Kehoe, 1986. "International policy cooperation may be undesirable," Staff Report 103, Federal Reserve Bank of Minneapolis.
- Carmen Díaz Roldán, 2000.
"Coordination of fiscal policies in a monetary union,"
Documentos de Trabajo - Lan Gaiak Departamento de EconomÃa - Universidad PÃºblica de Navarra
0003, Departamento de Economía - Universidad Pública de Navarra.
- Carmen Díaz-Roldán, . "Coordination of Fiscal Policies in a Monetary Union," Working Papers on International Economics and Finance 00-09, FEDEA.
- Carmen Díaz-Roldán, 2000. "Coordination Of Fiscal Policies In A Monetary Union," Working Papers 00-09, Asociación Española de Economía y Finanzas Internacionales.
- Rui Henrique Alves & Óscar Afonso, 2006.
"The “New” Stability and Growth Pact: More Flexible, Less Stupid?,"
FEP Working Papers
218, Universidade do Porto, Faculdade de Economia do Porto.
- Rui Alves & Oscar Afonso, 2007. "The "New" Stability and Growth Pact: More Flexible, Less Stupid?," Intereconomics: Review of European Economic Policy, Springer, vol. 42(4), pages 218-225, July.
- Banerjee, Gaurango, 2001. "Rules and discretion with common central bank and separate fiscal authorities," Journal of Economics and Business, Elsevier, vol. 53(1), pages 45-68.
- Yiyong Cai & Warwick J. McKibbin, 2013. "Uncertainty and International Climate Change Negotiations," CAMA Working Papers 2013-13, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Joseph Daniels & David VanHoose, 1998. "Two-Country Models of Monetary and Fiscal Policy: What Have We Learned? What More Can We Learn?," Open Economies Review, Springer, vol. 9(3), pages 265-284, July.
- Willem Buiter & Anne Sibert, 2004.
"Cross-Border Tax Externalities: Are Budget Deficits Too Small?,"
Birkbeck Working Papers in Economics and Finance
0408, Birkbeck, Department of Economics, Mathematics & Statistics.
- Buiter, Willem H & Sibert, Anne, 2004. "Cross-Border Tax Externalities: Are Budget Deficits too Small?," CEPR Discussion Papers 4164, C.E.P.R. Discussion Papers.
- Willem Buiter & Anne C. Sibert, 2003. "Cross-Border Tax Externalities: Are Budget Deficits Too Small?," NBER Working Papers 10110, National Bureau of Economic Research, Inc.
- Willem H. Buiter & Anne C. Sibert, 2003. "Cross-Border Tax Externalities: Are Budget Deficits too Small?," Levine's Bibliography 666156000000000430, UCLA Department of Economics.
- Van Der Ploeg, F., 1989.
"Tow Essays On Political Economy,"
8909, Tilburg - Center for Economic Research.
- Jon Faust, 1992. "Whom can we trust to run the Fed? Theoretical support for the founders' views," International Finance Discussion Papers 429, Board of Governors of the Federal Reserve System (U.S.).
- John William Hatfield & Gerard Padró i Miquel, 2008. "A Political Economy Theory of Partial Decentralization," NBER Working Papers 14628, National Bureau of Economic Research, Inc.
- Jay Bryson & Henrik Jensen & David Hoose, 1993. "Rules, discretion, and international monetary and fiscal policy coordination," Open Economies Review, Springer, vol. 4(2), pages 117-132, June.
- Jaewoo Lee & Michelle R. Garfinkel, 2000. "Political Influence and the Dynamic Consistency of Policy," American Economic Review, American Economic Association, vol. 90(3), pages 649-666, June.
- Laurence H. Meyer & Brian M. Doyle & Joseph E. Gagnon & Dale W. Henderson, 2002. "International coordination of macroeconomic policies: still alive in the new millennium?," International Finance Discussion Papers 723, Board of Governors of the Federal Reserve System (U.S.).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.