Fiscal Stabilization Policy and Fiscal Institutions

Campbell Leith and Simon Wren-Lewis

Oxford Review of Economic Policy, 2005, vol. 21, issue 4, 584-597

Abstract: In this paper we analyse counter-cyclical fiscal policy within the context of a microfounded analysis of business-cycle stabilization. We show that tax and spending instruments can have a useful counter-cyclical role, even after allowing for the distortionary nature of the instruments and the need for debt sustainability. A critical barrier to the use of fiscal instruments may be political economy concerns, and we survey recent suggestions involving alternative fiscal policy institutions. Copyright 2005, Oxford University Press.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:21:y:2005:i:4:p:584-597

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