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How diversified are small town revenues? Revenue diversification is analyzed among towns governed by town meetings. Using previously developed diversification measures, the findings confirm that these localities draw from less diverse revenue streams than other state and local governments. The reasons for these variations include differences in home rule status as well as tax and expenditure limitations imposed by states. The authors suggest that revenue allocation in these jurisdictions is substantively different from other forms of local government because these communities rely much less on sales taxation than states and municipalities. Their essay proposes possible options for improvement, along with other criteria by which small towns can assess their revenue diversification.

A senior Japanese specialist on Russia's economy and its oil- and gas-producing sectors analyzes the functions and performance of the Stabilization Fund of the Russian Federation and the new system replacing it in 2008. The Fund, created to diminish the effects of possible future decreases in oil prices on federal budget revenues and to absorb excess liquidity in the economy, was expected to exert a major curb on inflation. The author investigates the extent to which the latter, inflation-fighting role of the Fund has been fulfilled, given increases in the country's money supply and in state-regulated prices within the natural monopolies. Journal of Economic Literature, Classification Numbers: E50, E62, H20, H60.4 figures, 5 tables, 25 references. Key words: Russia, Stabilization Fund, oil and gas revenues, federal budget, inflation, natural monopolies, non--oil-gas balance, Dutch disease, fiscal policy.

A key reason why wages no longer keep up with productivity growth is because not enough attention is given to reducing unemployment. Economic policy should be recalibrated to correct this condition.

This article explores the relationship between progressive fiscal policies and economic growth. The study utilizes the variation among the 50 states and three national time periods to construct a panel data set. A two-way fixed effects model is run with state gross product per capita as the dependent variable and a series of independent variables that attempt to measure the progressivity of a state's fiscal policy. The results indicate statistically significant but small negative impacts on state gross product from progressive state fiscal policies. Care must be taken, however, in not making conclusive assertions about the results of the analysis given the problematic nature of model specification. The article concludes with some discussion of the implication of the results with respect to the Bush Administration tax policy. Keywords: progressive fiscal policy, redistribution policy, economic growth

A two-country sticky-price model is used to analyse the interactions between fiscal and monetary policy. The role of an 'activist' fiscal policy as a stabilisation tool is considered and a measure of the welfare gains from international fiscal policy cooperation is derived. It is found that welfare gains from fiscal cooperation do exist provided monetary policy is set cooperatively. There are also welfare gains from fiscal policy cooperation in a monetary union. However, it is found that a 'non-activist' fiscal policy can be better than non-cooperative fiscal policy when the international correlation of shocks is strongly negative. And non-cooperative fiscal policy can be better than cooperative fiscal policy if monetary policy is not set cooperatively. JEL classification: E52; E58; F42 Keywords: Fiscal and monetary policy: Policy coordination

The effect of tight and loose monetary policies on inflation is discussed. A case study of the monetary policy of the Turkish Central Bank (CBRT) has been analyzed. It is observed that CBRTEs tight monetary policy from 1987 thru 2002 resulted in the rise of inflation and the loose monetary thereafter has resulted in fall of inflation.

The effects of budget rule on fiscal policy are studied. The manner in which these effects depend on the underlying fiscal distortion, and on the degree of transparency of the budget are examined.

The main cause of global deflationary pressure is insufficient aggregate demand. The measures to combat deflation reveal that government has to raise aggregate demand by implementing expansionary monetary and fiscal policy, altering inflation targets and by changing deflationary expectations. Deflation can also be avoided by reducing the nominal rate of interest.

The fragmentation of fiscal policy making, is the degree to which the cost of one dollar of aggregate expenditure are internalized by individual fiscal policymakers. In order to determine the fiscal outcomes of the industrialized countries, we need to compare the role of the political and procedural factors along with ideology.

INTRODUCTION Traditional analyses of fiscal policy imply that raising government spending or reducing taxes stimulates economic activity in the short run. However, an alternative view developed by Blanchard (1984) and [...], We explore the short-run effects of fiscal policy using simulations of an empirical, rational-expectations, open-economy macromodel developed at the Federal Reserve Board. Based on this model, we find that tax cuts and spending increases generally stimulate economic activity in the short run, contrary to the extreme view that forward-looking financial markets more than offset the direct expansionary impulse of those actions. However, the magnitude of the stimulus is greatly attenuated by the financial-market feedback. For example, a sustained cut in personal income taxes raises output by less than the amount of the tax cut itself, and it likely reduces output (relative to baseline) in the first several years if phased in gradually over time. Our results also show that the estimated stimulus imparted by fiscal policy is sensitive to reasonable variation in the model's parameters.

A study is presented on the influence of fiscal policy on investment and profit in different countries. The policy is found to have negative effect in public spending. Various types of taxes also found to have negative impact on profits.

The fiscal theory of price determination suggests that if primary surpluses evolve independently of government debt, the equilibrium price level 'jumps' to assure fiscal solvency. In this non-Ricardian regime, fiscal policy--not monetary policy-provides the nominal anchor. Alternatively, in a Ricardian regime, primary surpluses are expected to respond to debt in a way that assures fiscal solvency, and the price level is determined in conventional ways. This paper argues that Ricardian regimes are as theoretically plausible as non-Ricardian regimes, and provide a more plausible interpretation of certain aspects of the postwar U.S. data than do non-Ricardian regimes. (JEL E60, E63)

Imperfect capital mobility and asset substitutability determine a lower and upper limit of exchange rate movement, as shown by a numerical simulation model. Overshooting of exchange rate increases if money demand is relatively high interest responsive. The effect of demand shocks, thus, is similar to monetary shocks on exchange rate overshooting. The results imply that at the level of policy making such effects of different exogenous shocks should be studied to reduce undesirable effects. Monetary and fiscal policy could interact for a stable exchange rate.

This paper claims that credit markets' imperfections matter significantly to open economies, and can alter basic macroeconomic results. This is demonstrated in the paper by use of an open economy model with individual credit rationing, due to asymmetric information and moral hazard. The paper concentrates on the effect of fiscal policy and shows that when credit is rationed, the standard result does not hold and a fiscal expansion may create a surplus instead of a deficit in the current account. Furthermore, the paper shows that whether credit is rationed or not depends on the tax burden.

A study was conducted to examine the relationship between fiscal decentralization and regional disparities in a set of countries in the European Union. Findings indicate that the devolution of fiscal power to subnational governments is negatively correlated with the level of regional inequality within the countries.

The way in which various factors like size, duration and composition of fiscal changes can change the effects of fiscal policy on private consumption with reference to an unbalanced panel of 19 OECD countries during the period 1960-2000 is discussed. The results show that expansionary fiscal contractions are likely to come at a considerable social cost.

The options available to the chancellor to generate adequate funds for public spending are discussed. Existing fiscal rules permit public borrowing only for investment purposes, and also stipulate that the debt to national income be below 40 per cent. In this scenario, tax rise seems inevitable, although increase of taxation is not advisable politically. Other option is curtailing of public spending in some services except NHS.