News Archive

This study’s aim is a comparative analysis between Portugal and Germany regarding the existence of a bidirectional relationship between the budget balance and the current account balance, starting with the introduction of the Euro (1999 and 2002, respectively) to the end of 2020. While the analysis finds a bilateral relationship, it shows that the budget balance and the current account balance for each country have similar and distinct developments, reflecting the distinct characteristics of each economy.

On 8 October 2021 Secretary of the Treasury Janet Yellen claimed that: “As of this morning, virtually the entire global economy has decided to end the race to the bottom on corporate taxation.” Tax competition threatens the long‐term viability of the existing international corporate tax system and bringing it to an end would thus be a veritable game‐changer. But is Secretary Yellen correct?

This EconPol Policy Report assesses the macroeconomic impact of fiscal policy measures introduced by the Austrian government during the Covid-19 crisis in 2020 and 2021. Large parts of the stimulus package aimed at stabilizing companies, employment and private households. According to the study short-term work schemes were particularly successful. Equally effective were measures supporting companies and the self-employed who were directly affected by the containment measures, e.g. liquidity support (fixed cost subsidies and loss compensations), tax reductions and tax deferrals.

The paper introduces a new dataset that includes quantitative harmonized indices of tax reforms, which provides indicators on tax reforms for tax rates and tax bases, along with detailed subindices for six types of taxes in in 23 industrialized and emerging economies between 1960 and 2014. Relating tax reforms to the timing of elections, we examine electoral cycles in tax reforms. Our results show that politicians postpone tax rate increases to after elections. A key innovation of our dataset is the coverage of harmonized indices for six tax types.

The Commission has recently launched a review of the economic governance rules. One reason for this (re-)launch is that it is widely assumed that the debt reduction criterion cannot and should not be enforced when the suspension of the fiscal rules motivated by the Covid crisis ends. The main reason given is that debt levels have increased and that this makes it more difficult to reach the debt reduction target, which is one twentieth of the difference between the actual and the 60% reference value. However, this argument is wrong.