14th Annual Conference of the Faculty of Economics and Business Administration Sofia, 7-8 October 2011
Edited By George Chobanov and Jürgen Plöhn
CHAPTER ONE: THEORETICAL ECONOMIC APPROACHES
FISCAL MISCHIEF AND FISCAL CONSTRAINT IN THE EUROPEAN CRISIS CORBETT F. GAULDEN (ANGELO STATE UNIVERSITY, TEXAS, USA) Introduction Capital markets, and those of us who watch what happens on the global stage, are practically breathless as we watch the unfolding economic and fiscal drama of modern Europe. Since this paper was presented almost three months agoϭ, governments have failed and regularly scheduled na- tional elections have occurred all over Europe, both in the western and eastern economies. Greece and Italy have been at the precipice and their crises are still not fully resolved. The need to shift toward more financial austerity has come into conflict with public expectations concerning var- ious entitlements. While the array of entitlements varies from nation to nation, the underlying phenomenon seems to be the need to meet the expectations of the national populaces and an apparent inability to pay for those from the extant public coffers. Three days after this keynote paper was presented at the 14th Confer- ence, the announcement of the Nobel Prize for Economics for 2011 was made. The prize was awarded to two American economists – Sargent and Sims. Their work emphasized that fiscal policy and practice impacts the general economy. This is a factor often overlooked in fiscal planning. Ignoring this fact may result in economic disaster as fiscal policies are implemented. I am indebted to numerous sources, mostly current, for the ideas pre- sented herein. These sources are dominated by the daily stream of news media in Europe and the...
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