Academic literature on the topic 'Anti-cyclical economic policy'

Introduction. Economic cycles, the periodic emergence of economic imbalances, deep economic crises, the need for effective management of economic fluctuations have created the need to develop an effective mechanism for anti-cyclical economic regulation. As a result of the in-depth study of these problems, it has been established that the most effective instruments of anti-cyclical economic regulation are financial instruments owned by the state and divided into monetary and fiscal ones. They in turn are divided into discretionary and non-discretionary, and regulated by legislative acts and regulatory documents. As a result of a retrospective analysis of management of economic cycles through the use of financial means of the state, it has been proved that monetary policy is less sustainable than economic fiscal policy. On the contrary, for the last century, precarious monetary policy has caused many financial and economic upheavals; the world has seen at least three monetary and monetary systems that have been subject to a downturn every time. Therefore, it is not worth considering monetary policy sufficiently effective in the implementation of anti-cyclical regulation. While fiscal policies each time, in all economic crises, have played the role of a "lifeline" for countries that have taken anti-cyclical economic regulation measures. That is why the study of the problem of effective state management of socio-economic fluctuations is one of the most urgent issues of economic science. The goal of the work. To investigate the essence of monetary and fiscal instruments of counter-cyclical regulation of the economy, to identify their strengths and weaknesses, to propose effective mechanisms of counter-cyclical regulation of the economy, which would ensure economic development in the country. Methods. In the course of the research, general scientific and empirical methods of economic science based on a systematic approach are used, in particular: methods of scientific knowledge: dialectical and logical, analysis and synthesis, generalization, graphical, scientific abstraction - in the study of state financial policy in the field of anti-cyclical regulation of the economy. Results. The article deals with the essence of monetary and monetary systems, analyzes their weak and strong sides, identifies the causes of their decline. It was established that monetary factors influenced the emergence of centers of economic crises. The essence of fiscal policy, its types and models, and the way in which its instruments influence the course of the economic cycle are considered and deeply analyzed. The mechanisms of fiscal policy, which should be used by the state at different stages of the economic cycle, are singled out. It is proved that in economically developed countries during the economic crisis it is expedient to use a socially-oriented model of fiscal policy of acyclic nature that most effectively influences the overcoming of economic imbalances and is capable of ensuring the economic equilibrium in the country as soon as possible. Countries that effectively applied the liberal model of fiscal policy, in the conditions of the economic crisis, were forced to resort to transformation towards a more rigid fiscal intervention by the state in economic processes-they were forced to use socially-oriented, acyclic fiscal policies. Only the wider participation of the state in the regulation of economic processes have ensured the rapid and effective overcoming of economic crises, and contributed to the achievement of economic development in most countries of the world. Perspectives. The results of scientific research can be useful for scientists and practitioners who are engaged in research on problems of anti-cyclical regulation of the economy, state financial policy and, in particular, fiscal policy.

The main goal of this paper is to analyse whether the fiscal policy of the Czech Republic is anti-cyclical. This analysis is carried out through decomposing the government’s balance into its cyclical and structural part. The first differences of the structural part are then put in relation to the output gap to determine whether the fiscal policy is pro- or anti-cyclical. Moreover, the correlation of government expenditures and revenues with the business cycle is also subject of our analysis. We also examine whether the fiscal rules which the Czech Republic would have to adhere to once it enters the euro area limit fiscal policy as a stabilizing mechanism.The paper concludes that the fiscal policy in the Czech Republic was for the most part rather of a random character than anti-cyclical during the examined period 1998–2013. This conclusion has two implications. Firstly, there is still room for improvement in fully and consistently utilizing fiscal policy to stabilise the Czech economy throughout economic cycles. Secondly, fiscal rules would not limit the Czech government to practice anti-cyclical fiscal policy if they have been implemented since 1998.

Economic growth and investment boom should not shadow the lack of institutional reforms, emerging fiscal populism as well as inefficiency of law enforcement system. The important forthcoming problem is the possibility of macroeconomic destabilization as a result of global depression. The current Russian economic policy is concentrated on stimulating economic growth (at any price) while it should now pay more attention to anti-cyclical measures. Another challenge for stability will come from inflation.

The state fiscal policy and its instruments are the main means of economic fluctuations management and they occupy a leading place in the system of the state anti-cyclical regulation of the economy. Special theoretical and methodological aspects of the fiscal policy and analysis of its influence on the course of the economic cycle were well-reasoned on the ground of a large number of scientific publications. However, it is relevant to research into this problem using the pragmatic approach, which will allow to obtain qualitative scientific results and make the necessary conclusions. In particular, the analysis of fiscal processes in the countries with different economic development and social standards will allow to distinguish the strengths and weaknesses of the opposing patterns of fiscal policy models and types and will determine the impact of such policies on economic growth and overcoming the economic crises in these countries.

The issues of interaction between monetary and financial authorities in the framework of effective policy aimed at achieving stabilization and development of the economy are considered. Coordination of actions of monetary and financial authorities is considered in the context of anti-cyclical and non-cyclical economic policy. Special attention is paid to coordinating actions in this area between the Central Bank of the Russian Federation and the Government of the Russian Federation

Economic growth is the key challenge at the political agenda of the leading countries including Russia. This papers discusses existing hypotheses of “secular stagnation” and “productivity paradox” - demand side problems (cyclical factors); special features of technological innovations (technological factors); anti-crisis policy preventing “creative destruction” (political factors); irrelevance of GDP measurement (statistical problems). Limits of growth contribute to a new global policy trend - emerging of populism, and the paper discusses the prospects of transformation of political populism to economic one. Global challenges provide the basis for further analysis of Russian economic development, and particularly the results of 2015-2016 anti-crisis policy, which helped the national economy to adapt to new economic realities of the post-crisis world.

Stability and Growth Pact is the main rule-based framework for the coordination of national fiscal policies in the economic and monetary union (EMU). It was established to safeguard sound public finances, an important requirement for EMU to function properly. Member states had a lot of determination before setting up a monetary union (nominal criteria were a condition to adopt common currency). In the next years, coordination of fiscal policy was not so successful. In many countries, revenues were temporarily boosted by tax-rich activity, while they didn’t restrict their expenditures. In most countries fiscal policy was pro-cyclical (not anti-cyclical) and they didn’t achieve their MTO. Financial crisis has sharpened budgetary problems in member states and showed the weakness of coordination rules.

AbstractBased on Schumpeterian theoretical considerations, this paper investigates the innovation behavior of firms during the severe economic crisis of the year 2008/2009. It focuses on transition countries of Central and Eastern Europe and Central Asia, which have completely restructured their innovation systems through the course of transition from planned to market economies a relatively short time ago. As a result of the crisis, we observe a strong decline of innovation activity in all transition economies. In line with the literature, there is, however, empirical evidence for both creative destruction as well as creative accumulation. This underlines two key findings: firstly, the universality and durability of Schumpeterian assumptions, and secondly, a call for anti-cyclical innovation policy.

Abstract The aim of this paper is to analyze controversies of modern macroeconomic theories in the period of the global economic crisis. Ideas, disagreement and similarities between the most important theories in relation to state intervention and anti-crisis economic policy are presented. The topical research has found a connection between the roots of the global economic crisis and the paradigm of new liberal theories. The crisis has confirmed that the idea of self-regulation in the private sector is untenable in practice. In times of crisis, the leading theoretical framework in economic policy is reexamined. Rules-based monetary and fiscal policies are replaced by discretionary decision-making. In the world economies affected by the crisis, anti-Keynesian cyclical measures of monetary and fiscal policies were implemented. A comprehensive and unequivocal reaffirmation of Keynesianism in anti-crisis policies has confirmed the assumption of the circularity of economic theories. Central banks quickly reduced their key interest rates and increased their money supply. Fiscal authorities implemented expansive stimulus programs. When creating a new macroeconomic paradigm, market imperfection must be taken into account as well as a limited range of government economic policies.

This article provides a content analysis of over 20 policy proposals for coping with the COVID-19 crisis that have been published by influential international organizations, governments, corporations, academics and civil society groups. The current situation, the role of digitalization during the crisis, and the composition of anti-crisis measures already taken by the world’s largest economies are investigated, and long-term measures are proposed aimed at restoring the global economy and moving toward more equitable and sustainable development.The authors identify a significant green component in public policy proposals published since the pandemic began and note that many proposals relate to equity and inclusiveness in development and meeting the needs of individuals. The authors further identify key areas of sustainable development that require action in the near future and which can create new opportunities for economic development: renewable energy and clean transport, cyclical economy, digitalization and environmental protection. At the same time, it is noted that the transition to a green economy is of a long-term nature and may conflict with the need in the short term to support the economy in overcoming the crisis.These priority areas for government action require attention within the framework of Russia’s anti-crisis policy. Given the sharp drop in oil prices, the acceleration of digitalization and decarbonization, and the magnitude of the 2020 economic crisis, Russia needs to begin an accelerated transition to low-carbon energy, a cyclical economy and the restoration of its ecosystems with accelerated digitalization.

Дисертація присвячена поглибленню теоретико-методичних засад дослідження особливостей циклічного розвитку глобальної економічної системи та стабілізації економічного розвитку України. Досліджено наукове підґрунтя та охарактеризовано закономірності існування економічних циклів. Удосконалено поняття економічного циклу, який запропоновано розуміти як особливий тип періодичних коливань економічної активності навколо довгострокового тренду, що були викликані особливостями функціонування власне економічної системи та низкою зовнішніх чинників, які виявляються у волатильній природі більшості макроекономічних показників. Розроблено й обґрунтовано товарно-орієнтований підхід до природи економічних циклів, що базується на життєвому циклі товарів, які обертаються на ринку. У межах цього підходу стадії життєвого циклу товару ототожнюються з фазами економічного циклу. Таким чином, нині відомі економічні цикли з різним періодом відповідають життєвому циклу товарів з аналогічним періодом їх обертання на ринку. Розроблено модель динаміки економічної системи, що складається з моделі економічного зростання Р. Солоу та циклічної складової, яка об’єднує економічні цикли різної періодичності. На базі моделі запропоновано алгоритм прогнозування економічної динаміки з урахуванням економічних циклів, методологічною основою якого є метод «сірого ящика», згідно з яким економічний тренд виступає як визначена (невідома) складова, а економічні цикли є предметом вивчення моделі. Практичне застосування алгоритму прогнозування побудовано на використанні фільтра Ходріка-Прескотта як методу детрендизації й швидкого перетворення Фур’є як методу спектрального аналізу циклічної складової. За допомогою запропонованої моделі циклічної динаміки економічних систем проаналізовано динаміку світового ВВП у період 1960-2016 рр., а також складено прогноз до 2021 р. Доведено, що динаміка розвитку світової економіки протягом періоду дослідження мала циклічний характер із явно вираженим 16річним циклом. Циклічність економічної активності простежується в таких макроекономічних показниках, як темпи зростання ВВП, темпи інфляції, рівень безробіття, а також рівень іноземних прямих інвестицій. Завдяки запропонованій моделі циклічної динаміки економічних систем виявлено 8-річні цикли в динаміці прямих іноземних інвестицій та динаміці угод зі злиття й поглинання, які активізуються в точках екстремуму економічного циклу. За результатами дослідження виявлено закономірності протікання економічних циклів у межах глобальної економічної системи: економічні цикли в розвинених країнах мають випереджальний характер стосовно країн, що розвиваються; амплітуда економічних коливань навколо довгострокового тренду в країнах, що розвиваються, в 1,9 раз більша, ніж у розвинених країнах; високі темпи економічного зростання відповідають більшому ступеню волатильності темпів економічного розвитку; міжнародна торгівля відіграє головну роль у синхронізації економічних процесів у масштабі глобальної економічної системи; динаміка чистого експорту й поточного рахунка платіжного балансу в розвинених країнах і країнах, що розвиваються, має зворотно пропорційний характер; динаміка прямих іноземних інвестицій тісно корелює з фазами економічних циклів. Визначено головну мету економічної політики держави, якою слід вважати забезпечення динамічної стійкості, що передбачає підтримання стабільних показників економічного зростання в заданих межах. Для досягнення стабільності економічного розвитку державне регулювання економіки має базуватися на основі дії вбудованих стабілізаторів, до яких ми відносимо автоматичну зміну податкових надходжень і платежів залежно від фази економічного циклу. Розроблено економетричну модель динаміки економічного зростання України на базі моделей класу ARIMA, що розкриває сутність особливостей протікання економічних циклів у національній економіці України на сучасному етапі, а також чинники, що визначають параметри економічних циклів у національному масштабі. Визначено організаційно-економічні засади підвищення рівня міжнародної конкурентоспроможності України в контексті її адаптації до нестабільного глобального економічного простору з метою мінімізації негативних чинників циклічності розвитку глобальної економічної системи та прискорення динаміки економічного зростання. Ключові слова: глобальна економічна система, світова економіка, економічний цикл, цикл ділової активності, циклічність економічного розвитку, економічна криза, канали синхронізації економічних процесів, модель динаміки економічної системи, антициклічна економічна політика. The dissertation for a Candidate Degree in Economics. Speciality 08.00.02 – World Economy and International Economic Relations. – V.N. Karazin Kharkiv National University, Ministry of Education and Science of Ukraine, Kharkiv, 2018. The dissertation provides a deeper theoretical and methodological grounding for the studies of global economic system cyclical development and stability of Ukrainian economic development. The study examined scientific arguments and characterized the patterns of existing economic cycles. As a result of combination of the groups of theories, the definition of economic cycle was refined and put forward as a special type of periodic fluctuations in economic activity around the long-term trend, caused by internal features of the economic system and by a set of external factors that manifest themselves through volatility of most macroeconomic indicators. The dissertation proposes a new product based approach to the study of economic cycles, which considers life-cycle of goods circulating in the market. Within this approach, the product life-cycle stages are identified with the phases of economic cycle. On this ground, the well-known economic cycles of different periods correspond to the life-cycle of goods with a similar period of circulation in the market. The results of this study construct a model of economic system dynamics, which consists from R. Solow economic growth model and cyclical component that includes economic cycles with different periodicity. Based on this model, an algorithm for predicting economic performance that takes into account economic cycles was developed. This algorithm is based on the grey box method, according to which the economic trend is a predefined component, and economic cycles become the subject of the model study. Practical application of the prediction algorithm is based on the Hodrick-Prescott filter as a method of detrending and Fast Fourier Transform as a method of spectral analysis of the cyclic component. With the help of the proposed model of economic system cyclical performance, the dynamics of world GDP in the period between 1960-2016 was analysed, and a forecast was made up to 2021. It is argued then that the world economy development performance during the period viewed contains a prominent 16-year long cycle. The cyclic features of economic activity were traced in such macroeconomic indicators as GDP growth rate, inflation rate, unemployment rate, as well as the amount of foreign direct investment. On the basis of the proposed model of cyclical economic system dynamics, we can define 8-year long cycles in foreign direct investment dynamics and in mergers and acquisitions agreements, triggered at the extremes of the economic cycle. The results of the study revealed certain patterns of economic cycles that take place within the global economic system: economic cycles in developed countries are fast-paced compared to developing countries; the amplitude of economic fluctuations around the long-term trend in developing countries is 1.9 times more than in developed countries; high economic growth rates correspond to high volatility in economic development rates; international trade plays a major role in synchronization of economic processes in the global economic system; net exports and current account balance performance in developed and developing countries are indirectly proportional; foreign direct investment performance is closely related to economic cycle phases. The study also defines the main goal of government economic policy, which needs to ensure dynamic consistency that presupposes stable economic growth within the given frames. To achieve stable economic development, government regulation of the economy should be based on the built-in stabilizers, to which we include automatic change in tax revenues and payments, depending on the business cycle phase. The thesis develops an econometric model of Ukrainian economic growth dynamics based on ARIMA models, revealing the essence of economic cycles in Ukrainian national economy at its present stage, as well as the factors determining parameters of economic cycles on a national scale. Organizational and economic foundations for increasing Ukraine’s international competitiveness with the purpose of adapting to the volatile global economic space, were determined in order to reduce the negative effect of global economic system cyclical development and accelerate the economic growth. Keywords: global economic system, world economy, economic cycle, business cycle, cyclical economic development, economic crisis, economic processes synchronization channels, model of dynamics of the economic system, anti-cyclical economic policy.

In chapter 5, José Villaverde and Adolfo Maza discuss the case of Spain, which, like Italy, has experienced the most acute economic crisis since the end of the Second World War. Because of that, the country had to face some important constraints in its public finances and public investment experienced a severe blow after the outbreak of the crisis. Before the 2008 Global Financial Crisis — namely during the period 2000–2007 — Spain was the country that registered the second highest increase in public gross fixed capital formation among the five biggest European countries (France, Germany, Spain, Italy and the UK), a rate (6.8% per year) that was also much higher than that of the EU (2.3%) and the euro area (2.6%). However, over the next period, 2008–2013, the situation changed completely: public investment dropped on an annual basis at a rate close to 11%; thus, Spain suffered the most acute decline in public investment by far among the among the big five. It also emerges that public investment in Spain has been very volatile and pro-cyclical over time (with large increase periods during boom times and huge falls during recessions); investment in infrastructures always represents the main component of public investment. This implies a policy agenda towards a more anti-cyclical stance and a rebalancing of types of investments, for instance the necessity to increase the share devoted to information and communications technology (ICT).

In this article, we will cover the main anti-Keynesian views and macroeconomic systems that arose in the post Keynes period as well as their fiscal and monetary policy guidelines. As is known, the early Classical economists introduced a macroeconomic system based on the Quantity Theory and Say’s Law resulting in automatic full-employment equilibrium; and finally after 1929-1934 Great World Depression, the Keynesian System was introduced as a “revolution” (Keynesian Revolution) in theory and practice. As a result of the Keynesian policies implemented, European countries and the United States not only got over the Great World Depression but also in the years following the World War II, they have observed a fast and stable growth for a long time. Moreover, cyclical fluctuations have been controlled to a great extent. Even so, at the stage when the Keynesian System was introduced, anti-Keynesian views and macroeconomic systems were immediately introduced. Intense academic discussions between advocates of these views and the Keynesian economists have continued up until today. Meanwhile, many economists such as J.R. Hicks, R.F. Harrod, N. Kaldor, M. Kalesci, A.W. Philips, A. Hansen, P.A. Samuelson, E. Domar, J. Tobin, R. Solow, A.M. Okun, W. Helier, G. Ackler, F. Modigliani, and R. Musgrave and many others have developed and defended the Keynesian System from different aspects. We can characterize significant anti-Keynesian views and macroeconomic systems as the “Counter-Revolution”.