Fiscal Rules, Trade Elasticities, Spillovers

The recent debt crisis has led to a revival of the debate on whether fiscal policy-makers should be constrained in their discretion by fiscal rules. However, empirical evidence is ambiguous and there is no consensus on the optimal design of fiscal rules that ensures fiscal sustainability, reduces output volatility and can be reconciled with the required flexibility to respond to unexpected shocks. In his research project, partially ordered set theory will be used as an alternative approach to measure fiscal rules, using data from the OECD Budget Survey and recent IMF data on fiscal rules. These measures of fiscal rules will then be used to test several political-economy theories on the (determinants and) effects of fiscal rules.

During his research stay at CES, Harald Badinger will work on several ongoing research projects, the first aiming at assessing the effects of fiscal rules on fiscal policy.

His second project concerns the estimation of micro- and macro-Armington elasticities in a Melitz framework for European countries, building on recent theoretical work and empirical evidence for the US (by Feenstra, Luck, Obstfeldt and Russ). The subject of the third project is the modelling and estimation of national and international spillovers and their transmission channels between economies’ real and financial sectors.

Mr Badinger will present a series of CES Lectures on “Modelling and Estimating Spillover Effects: Methods and Applications”.

Harald Badinger is Full Professor for International Economics at the Department of Economics at the Vienna University of Economics and Business (WU) since 2010. He is also a Research Associate of the Austrian Institute of Economic Research and CESifo Research Fellow in the Global Economy area. Prior to coming to WU, he served as Researcher at the Economic Studies Division of the Austrian Central Bank.