In this seminar Stefan Hohberger will provide an overview of his recent paper, The Sectoral Reallocation of Government Purchases As Budgetary-Neutral Stabilisation Tool: A Model-Based Analysis. The paper focus on rules that adjust the composition of government spending on tradable and non-tradable goods in response to domestic or external indicators.

The fiscal policy is budgetary-neutral in the sense that the overall level of government expenditure is kept constant. Stefan’s paper finds that state-dependent changes in the composition of government spending between tradable and non-tradable goods can be a useful instrument to stabilise domestic activity and increase household welfare for economy-wide supply and demand shocks. In contrast to fiscal devaluation, however, the expenditure-shifting rule faces a trade-off between stabilising domestic activity and enhancing household welfare, on the one hand, and reducing excessive fluctuations in external positions, on the other hand.

Stefan is a final-year PhD student in Economics in the University of Bayreuth while working there as a research and teaching assistant since 2009. His research focuses on fiscal policy as a stabilisation tool within monetary union.

The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.