Course 2017-2018 a.y.

Classes: 31 (II sem.)

Instructors:
Class 31: CARLO COTTARELLI

With the return to fiscal policy activism in the aftermath of the 2008-09 global economic and financial crisis, the interest in the role that fiscal policy can play in affecting macroeconomic developments has been revived. At the same time, the surge in public debt-to-GDP ratios in most advanced economies, together with some public debt market crises especially within the euro area, have raised concerns about public debt sustainability.
This course allows students to understand the constraints set on fiscal policy by the need to ensure the sustainability of public debt, the role that fiscal policy can play within those constraints to support economic activity, and the institutions that can strengthen fiscal policy credibility, including fiscal rules, medium-term fiscal programs and spending reviews.
Case studies are used to illustrate these issues.

• Ensuring fiscal sustainability (theoretical and empirical definitions of fiscal solvency and public debt sustainability; public debt, money and inflation; fiscal trends and risks in advanced economies; public debt restructuring and other non-standard options to lower public debt).
• Long-term relationship between public debt and growth (public debt and taxation, crowding out, fiscal uncertainty).
• Fiscal policy, macro-stabilization and implications for fiscal solvency (fiscal multipliers, fiscal stance indicators, impact of fiscal policy on potential GDP).
• Fiscal institutions (fiscal rules, medium-term fiscal programs, spending reviews, issues in fiscal federalism, fiscal transparency, the budgetary process).

The exam modalities is the same for all students (regardless of whether they are attending or not the classes). The exam is a written test covering the whole course program and including open-ended questions.

The exam is based on slides and other teaching material that are made available to students on the course website after each class.