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This paper focuses on two books that Robert Heilbroner wrote with Peter Bernstein on public finance – A Primer on Government Spending (1963) and The Debt and the Deficit (1989). It also discusses how the economic world changed between the early 1960s and the late 1980s, and how these changes affected their books. Primer introduced Keynesian economics, and the possibility that government policy and deficits could be forces for good in the world. Debt focused exclusively on government deficits and public debt. Changing circumstances made this work a more difficult undertaking. During the late 1950s and early 1960s, government budget deficits were small, growth was sluggish, and Keynesianism was the dominant paradigm in macroeconomics. Primer explained Keynesian public finance, why tax cuts would spur spending and growth, and why we should not worry about government debt under these circumstances. By the 1980s, Keynes was vanquished, deficits were ballooning, and Keynesian public finance was under attack. Contrary to the conventional wisdom at the time, Debt advocated government deficits along the lines proposed by Keynes but not along the lines enacted during the Reagan administration. Nonetheless, there were many similarities in these two works. Both made a case for an active government role in creating a good society; and both argued that when done correctly deficit spending created no economic problems and had many benefits.

This chapter attempts to analyze mainly the interactions between the implementation of inflation targeting (IT) policy and performance in the conduct of economic policies (fiscal and exchange rate) in emerging countries. More precisely, empirical studies conducted in this chapter aim to apprehend the feedback effect of this strategy of monetary policy on the budget deficit and volatility of exchange rate performance. This said, we consider the institutional framework as endogenous to IT and analyze the response of authorities to the adoption of this monetary regime. To do this, the retained methodological path in this chapter is an empirical way, based on the econometrics of panel data. First, our contribution to the existing literature is to evaluate the time-varying treatment effect of IT’s adoption on the budget deficit of emerging inflation targeters, using the propensity score matching approach. Our empirical analysis, conducted on a sample of 34 economies (13 IT and 21 non-IT economies) for the period from 1990 to 2010, show a significant impact of IT on the reduction of budget deficit in emerging countries having adopted this monetary policy framework. Therefore, we can say that the emerging government can benefit ex post and gradually from a decline in their public deficits. Retaining the same econometric approach and sample, we tried secondly to empirically examine whether the adoption of IT in emerging inflation targeters has been effectively translated by an increase in the nominal effective exchange rate volatility compared to non-IT countries. Our results show that this effect is decreasing and that this volatility is becoming less important after the shift to this monetary regime. We might suggest that this indirect and occasional intervention in the foreign exchange market can be made by fear of inflation rather than by fear of floating hence in most emerging countries that have adopted the IT strategy. Finally, we can say that our conclusions corroborate the literature of disciplining effects of IT regime on fiscal policy performance as well as the two controversial effects of IT on the nominal effective exchange rate volatility.

In the euro’s initial years, Greece, Ireland, Italy, Portugal and Spain observed capital flow bonanzas and credit-booms, two cycles known to precede banking crises. Domestic banks fuelled those cycles via funding obtained from foreign financial institutions. Yet, these countries’ banking and financial crises have unfolded in different modes. In Ireland and Spain, credit-booms propelled real-estate bubbles, which dragged banks into crises, with governments’ accounts later being affected when rescuing banks (Spanish regional banks, and all Irish major banks). In Greece and Italy, extra monetary means perpetuated government imbalances (e.g. debt levels above 100% of GDP, large yearly deficits). More severely in Greece, banks were brought into crises by sovereign crises. In Portugal, a mixture of private and public sector–led crises have occurred. Our comparative study finds that these crises: (1) are connected to shocks and imbalances caused by dangerous banking sector cycles during the monetary integration process; (2) were not mere expansions of the US subprime crisis; (3) were not only caused by country-specific features and institutions; and (4) followed distinct paths, therefore, a uniform model encompassing all post-euro crises cannot exist.

The chapter is devoted to the factors aimed at optimizing the partnership of public and private sectors in the sphere of public infrastructure development. In modern conditions of economic slowdown and budget consolidation in Russia, the infrastructure has become the most important driver of economic growth and public–private partnership (PPP) – the most perspective form of cooperation of public and private investors of infrastructure projects. PPP interpretation as a structural relationship of economic system allows the authors to model optimal combination of formal and informal institutions in order to stimulate long-term economic growth. It becomes promising to model replacement of budget funds by private investment to ensure positive impact on the Russian development despite the budget consolidation. It could only be achieved in the case of formal institutionalization of appropriate conditions for private investors as to low transactional costs and attractive financial parameters. There have been determined some PPP standards connected with public infrastructure projects in order to reduce capital expenditures of the budget funds and increase the inflow of private investment. The authors have managed to obtain model estimates and graphic interpretation of government expenditures’ efficiency increase that could help to structure the fiscal conditions to induce positive multiplier effect as a result of PPP forms improvement in the public infrastructure development.

Introduction: Interest and action concerning fiscal accountability have surged around the world in recent years, especially among Sub-Saharan African countries, because decision-making in the region has traditionally been shrouded in secrecy, with the general public having almost no access to knowledge on the management of public funds. Limited fiscal transparency has led to government fiscal crises where citizens have begun to call for better governance and participation in public funds.

Purpose: This study examines the impact of e-governance on the overall fiscal performance in SSA, while the specific objectives include the effect of e-governance on the central government’s primary balance and public external debt stock.

Methodology: The study employs annual data across 43 SSA countries to analyse the study from 2000 to 2018 using the panel-corrected standard error (PCSE) method for estimating the models. Overall fiscal performance is generated through principal component analysis (PCA), which involves a linear combination of public external debt stock and central government primary balance.

Findings: The results reveal that there is clear evidence of the effectiveness of e-governance on the overall fiscal performance, even though this is not the same for the public external debt stock in SSA, despite the success recorded in the region’s ICT and telecommunication sectors in recent times. In addition, all other control variables impact fiscal performance except population growth.

This chapter investigates financial resilience of German local governments. The local governments included in this analysis challenged the applicability of the financial resilience concept by reporting no significant direct impact of the financial crisis during the last 10 years. This is also in line with more general observations suggesting that Germany weathered the financial crisis successfully and without the dramatic effects on its local governments that are observable in other countries. During semi-structured interviews with key administrative decision-makers, it turned out that the financial crisis impacted the local governments’ commercial tax revenues only in its aftermath, and respondents rather highlighted the refugee crisis in 2015 and sudden changes in the tax base caused by relocation, bankruptcy or economic turmoil as financial shocks. More general trends, for example, upper governmental levels devolving more service and administrative responsibility without sufficient compensation, and in particular long-term issues, that is, high debt levels magnifying effects of financial shocks, seem to challenge German local governments. Some cases included in this investigation seem reluctant to make conflict-laden, but necessary changes, and feel exposed to policies and regulations by upper governmental levels. This creates uncertainty and at times leaves them in a sense of helplessness and infeasibility of proper planning. However, the need for investing resources to build up internal capacities has already been pointed out. From a financial resilience perspective, this seems even more important in a context where relying on buffering was feasible, but might prove insufficient once other internal capacities are required to tackle local governments’ financial vulnerabilities.

After investigating debt sustainability in Lebanon, this chapter examines the conduct of monetary policy during the last decade. The empirical section looks at the long-run relationship between the nominal exchange rate and the inflation rate by employing Johansen co-integration technique. The resulting coefficient estimates suggest that while the Lebanese monetary authority has succeeded in containing inflationary pressures by adopting a monetary policy rule targeting the nominal exchange rate, it should have adopted a real exchange rate targeting policy to dampen the effects of its current policy on interest rates, public debt and budget deficits, and the growth in gross domestic product.