 The cyclical behaviour of fiscal policy: A meta-analysisEconomic Modelling, 2023, vol. 123, issue C Abstract: Whether fiscal policy exacerbates or counteracts fluctuations in the economy is a key policy issue, because it contributes to growth and inflation outcomes. However, existing literature provides partly contradictory findings. Therefore, we provide the first quantitative synthesis by applying meta-regression methods to a novel data set with 3536 cyclicality estimates from 154 studies. Our main findings are: on average, fiscal policy in advanced countries is countercyclical, but developing countries lean towards procyclicality. Furthermore, government spending policies exacerbate business cycle fluctuations more than tax policies. Finally, fiscal policy plans are more countercyclical than policy outcomes. Results are robust to tackling endogeneity between the business cycle and fiscal policy. While our analysis points to several stylised facts, it also highlights the importance of data and specification choices and allows for predictions concerning the cyclical behaviour of fiscal policy given best-practice assumptions on study design. Keywords: Fiscal policy; Automatic stabilisers; Business cycle; Meta-analysis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:123:y:2023:i:c:s0264999323000718 DOI: 10.1016/j.econmod.2023.106259 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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