Fiscal policy responsiveness, persistence and discretion

Antonio Afonso, Luca Agnello () and Davide Furceri ()

No 954, Working Paper Series from European Central Bank

Abstract: We decompose fiscal policy in three components: i) responsiveness, ii) persistence and iii) discretion. Using a sample of 132 countries, our results point out that fiscal policy tends to be more persistent than to respond to output conditions. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence thereby suggesting that countries with higher persistence have lower discretion and vice versa. In particular, while government size, country size and income have negative effects on the discretion component of fiscal policy, they tend to increase fiscal policy persistence. JEL Classification: E62, H50.

Keywords: Fiscal Policy; Fiscal Volatility. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
Date: 2008-10
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Related works:
Working Paper: Fiscal Policy Responsiveness, Persistence, and Discretion (2008)
Working Paper: Fiscal Policy Responiveness, Persistence and Discretion (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:ecb:ecbwps:20080954

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