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Fiscal Policy and Macroeconomic Stability; Automatic Stabilizers Work, Always and Everywhere

The paper revisits the link between fiscal policy and macroeconomic stability. Two salient features of our analysis are (1) a systematic test for the government’s ambivalent role as a shock absorber and a shock inducer—removing a downward bias present in existing estimates of the impact of automatic stabilizers—and (2) a broad sample of advanced and emerging market economies. Results provide strong support for the view that fiscal stabilization operates mainly through automatic stabilizers. Also, the destabilizing impact of policy changes not systematically related to the business cycle may not be as robust as suggested in the literature.
Year of publication:
2010-05-01
Authors: Debrun, Xavier ; Kapoor, Radhicka
Institutions: International Monetary Fund (IMF)
Subject: Economic models | Fiscal stability | fiscal policy | expenditure | discretionary fiscal policy | fiscal stabilization | cyclical fiscal policy | budget balance | public expenditure | fiscal shocks | government expenditure | fiscal impulses | fiscal policies | public spending | fiscal stabilizers | budget balances | fiscal authorities | fiscal indicators | public finances | general government expenditure | public debt | budget deficit | fiscal multipliers | fiscal stance | tax rates | national expenditure | budgetary impact | expenditure programs | fiscal behavior | expenditure control | expenditure ratio | tax revenues | government spending | weak expenditure control | fiscal stimulus | public finance | fiscal balances | government budget | fiscal stabilization policies | fiscal multiplier | tax base | budget surplus | tax changes | fiscal controls | budgetary changes | taxation | fiscal policy coordination | tax collection | fiscal studies | fiscal measures | tax bases | government budget deficit | expenditure controls | fiscal institutions | fiscal ? multipliers | fiscal space | expenditure ceilings | government expenditure ratio | fiscal balance | fiscal data | budgetary institutions | domestic expenditure | fiscal impulse | expenditure composition | fiscal council | fiscal expansions | progressive taxation | fiscal frameworks | fiscal agencies | fiscal aggregates
Extent:
application/pdf
Series:
Type of publication: Book / Working Paper
Language: English
Notes:
The text is part of a series IMF Working Papers Number 10/111 4 pages long
Source:
Persistent link: https://www.econbiz.de/10008533230
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