Varieties of Capitalism and Fiscal Stimulus, 2008–2010

Toloudis Nicholas ()
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Toloudis Nicholas: The College of New Jersey 2000 Pennington Road, Ewing, NJ 08628, U.S.A.

TalTech Journal of European Studies, 2015, vol. 5, issue 2, 56-69

Abstract: This paper tests the Varieties of Capitalism (VoC) framework to explain variation in fiscal stimulus measures across OECD countries in response to the 2008-2010 economic crisis. Following Soskice (2007), I argue that coordinated market economies are less flexible with fiscal policy than liberal market economies. Multivariate analysis across 23 OECD countries demonstrates that VoC is more powerful than three competing theories: fiscal institutions, which hypothesizes more stimulus in countries with less restrictive budgetary rules; debt credibility, which hypothesizes more stimulus in less indebted countries; and political partisanship, which hypothesizes more stimulus in countries governed by the left.

Keywords: fiscal policy; fiscal stimulus; government debt; institutions; OECD; varieties of capitalism (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:bjeust:v:5:y:2015:i:2:p:56-69:n:4

DOI: 10.1515/bjes-2015-0013

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