Battaglini, Marco; Coate, Stephen - 2008
"This paper presents a political economy theory of the behavior of fiscal policy over the business cycle. The theory … submartingale. In the short run, fiscal policy can be pro-cyclical with government debt spiking up upon entering a boom. However, in … the long run, fiscal policy is counter-cyclical with debt increasing in recessions and decreasing in booms. Government …