Fiscal Policy and Macroeconomic Stability: Automatic Stabilizers Work, Always and Everywhere
Xavier Debrun and
Radhicka Kapoor
No 2010/111, IMF Working Papers from International Monetary Fund
Abstract:
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.
Keywords: WP; output gap; government size; central bank; real GDP (search for similar items in EconPapers)
Pages: 46
Date: 2010-05-01
References: Add references at CitEc
Citations: View citations in EconPapers (52)
Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=23818 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2010/111
Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm
Access Statistics for this paper
More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().