Papers by francesco giavazzi
It is often argued that the EMS is an effective disciplinary device for inflation-prone countries... more It is often argued that the EMS is an effective disciplinary device for inflation-prone countries in Europe, since it forces the respective policy-makers to pursue more restrictive monetary policies than they would otherwise. It is not clear, however, why these countries should submit themselves to such discipline. This paper argues that, to answer this question appropriately, one must consider that EMS membership brings potentially large credibility gains to policy-makers in inflation-prone countries: the reason is that not only it attaches an extra penalty to inflation (in terms of real appreciation), but makes the public aware that the policy-maker is faced with such penalty, and thus helps to overcome the inefficiency stemming from the public's mistrust of the authorities.
This paper studies empirically the effects of and the interactions amongst economic and political... more This paper studies empirically the effects of and the interactions amongst economic and political liberalizations. Economic liberalizations are measured by a widely used indicator that captures the scope of the market in the economy, and in particular of policies towards freer international trade (cf. Sachs and Werner 1995, Wacziarg and Welch 2003). Political liberalizations correspond to the event of becoming
... Consolidation of the banking industries within individual European countries is undesirable f... more ... Consolidation of the banking industries within individual European countries is undesirable for reasons of competition, But it may prove popular: chauvinistic support for national champions' often hides behind the fear that ... can understand and service local clients appropriately. ...
Page 1. Nice Try: Should the Treaty of Mice be Ratified? Monitoring European Integration 11 Richa... more Page 1. Nice Try: Should the Treaty of Mice be Ratified? Monitoring European Integration 11 Richard E. Baldwin, Erik Berglof, Francesco Giavazzi and Mika Widgren Page 2. Page 3. NICE TRY: SHOULD THE TREATY OF NICE BE RATIFIED? ...
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In earlier work we documented two episodes in which a sharp fiscal consolidation was associated w... more In earlier work we documented two episodes in which a sharp fiscal consolidation was associated with a very large expansions in private domestic demand. In this paper we draw on further evidence to investigate if and when fiscal policy changes can have such non-Keynesian effects. In the first part of the paper, we analyze cross-country data for 19 OECD countries.
European Economic Review, 2000
Several recent studies suggest that the response of national saving to fiscal policy may be non-l... more Several recent studies suggest that the response of national saving to fiscal policy may be non-linear. In this paper we use two data sets to search for the circumstances in which such non-linear response may arise: a sample of OECD countries, already used in previous studies, and a sample of developing countries, using more recent World Bank data. We find
We study whether cultural attitudes towards gender, the young, and leisure are significant determ... more We study whether cultural attitudes towards gender, the young, and leisure are significant determinants of the evolution over time of the employment rates of women and of the young, and of hours worked in OECD countries. Beyond controlling for a larger menu of policies, institutions and structural characteristics of the economy than has been done so far, our analysis improves upon existing studies of the role of "culture" for labor market outcomes by dealing explicitly with the endogeneity of attitudes, policies and institutions, and by allowing for the persistent nature of labor market outcomes. When we do all this we find that culture still matters for women employment rates and for hours worked. However, policies and other institutional or structural characteristics are also important. Attitudes towards youth independence, however, do not appear to be important in explaining the employment rate of the young. In the case of women employment rates, the policy variable that is significant along with attitudes, is the OECD index of employment protection legislation. For hours worked the policy variables that play a role, along with attitudes, are the tax wedge and unemployment benefits. The quantitative impact of these policy variables is such that changes in policies have at least the potential to undo the effect of variations in cultural traits on labor market outcomes.
SSRN Electronic Journal, 2000
This paper reviews the first evidence on the impact of European Monetary Union on European capita... more This paper reviews the first evidence on the impact of European Monetary Union on European capital markets, one year after the launch of the single currency. Our assessment of this evidence is very favourable. On almost all counts EMU has either changed the European financial landscape already drastically or has the potential to do so in the future. We argue that this is less due to the well-known direct effects of EMU, such as the elimination of intra-European currency risk, than to a number of indirect consequences through feedback mechanisms that seem to have been triggered by EMU.
Studying the recent experience of Brazil the paper explains how default risk is at the centre of ... more Studying the recent experience of Brazil the paper explains how default risk is at the centre of the mechanism through which an emerging market central bank that targets inflation might lose control of inflation--in other words of the mechanism through which the economy might move from a regime of "monetary dominance" to one of "fiscal dominance". The literature, from to the modern fiscal theory of the price level has discussed how an unsustainable fiscal policy may hinder the effectiveness of monetary policy, to the point that an increase in interest rates can have a perverse effect on inflation. We show that the presence of default risk reinforces the possibility that a vicious circle might arise, making the fiscal constraint on monetary policy more stringent.
The Quarterly Journal of Economics, 2003
Product and labor market deregulation reduce and redistribute rents, leading economic players to ... more Product and labor market deregulation reduce and redistribute rents, leading economic players to adjust to this new distribution. It typically comes with distribution and dynamic effects. To study these effects, we build a ...
Scandinavian Journal of Economics, 2002
This paper examines public debt management during episodes of fiscal stabilization when long-term... more This paper examines public debt management during episodes of fiscal stabilization when long-term interest rates are generally higher than governments' expectations of future rates. We find that governments increase the share of fixed-rate long-term debt denominated in the domestic currency, the higher is the conditional volatility of short-term interest rates, the lower are long-term interest rates, and the stronger is the fall in long-term rates that follows the announcement of the stabilization program. This evidence suggests that governments tend to prefer long to short maturity debt because they are concerned about refinancing risk. However, when long-term rates are high relative to their expectations, they issue short maturity debt to minimize borrowing costs.
Vierteljahrshefte zur Wirtschaftsforschung, 2009
When natural resource income is appropriated by the government, the re arises the issue of the us... more When natural resource income is appropriated by the government, the re arises the issue of the use made of this income. While the "Dutch disease" literature considers the intratemporal allocative issues, this paper focuses the intertemporal aspects implied by the exhaustibility of natural resources. Three main cases are considered: the government can use its resources to either reduce taxes, step up public spending, or reduce its indebtedness. These options are shown to have markedly contrasted effects on the exchange rate and the current account, both temporaril y and permanently. Copyright 1988 by Royal Economic Society.
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Papers by francesco giavazzi