Fiscal policy responsiveness, persistence and discretion

Antonio Afonso, Davide Furceri and Luca Agnello ()

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)
Date: 2008-10
Note: 1145200
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Fiscal policy responsiveness, persistence, and discretion (2010)
Working Paper: Fiscal Policy Responiveness, Persistence and Discretion (2008)
Working Paper: Fiscal Policy Responsiveness, Persistence, and Discretion (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2008954

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