The main purpose of
this Thesis is the discussion and analysis of several macroeconomic
consequences of fiscal policy concerning the following topics: Ricardian
Equivalence hypothesis; fiscal policy sustainability; the fiscal theory of
price level and the expansionary fiscal contractions issue.
Concerning the existence of
non-Keynesian effects of fiscal policy, a theoretical model is presented, with
two periods, where there are rationed consumers and the domestic interest rate
depends namely on the level of public revenues. In this set-up, the bigger the
proportion of non-rationed consumers the bigger the probability that fiscal
policy non-Keynesian effects may arise. From the empirical analysis, with panel
data, the expansionary fiscal contractions hypothesis does not seem to be
corroborated by the data for the EU-15. To assess the public debt neutrality
hypothesis, those countries were classified in two groups, according to their
level of indebtedness: “more indebted” and “less indebted”, a somehow different
methodology from the vast majority of the literature. The results seem to
indicate that consumers are less Ricardian when the debt-to-GDP ratio is
higher. Additionally, the empirical research implemented, shows that fiscal
policy may not have been sustainable in the majority of the countries between
1970 e 2000.
Keywords:
Ricardian Equivalence; fiscal policy sustainability; fiscal theory of price
level; non-Keynesian effects; Euro area; panel data.