A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries

Jeffrey Frankel

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: American fiscal policy has been procyclical: Washington wasted the expansion period 2001-2007 by running budget deficits, but by 2011 had come to feel constrained by inherited debt to withdraw fiscal stimulus. Chile has achieved countercyclical fiscal policy - saving in booms and easing in recession - during the same decade that rich countries forgot how to do so. Chile has a rule that targets a structural budget balance. But rules are not credible by themselves. In Europe and the U.S., official forecasts are overly optimistic in booms; so revenue is spent rather than saved. Chile avoids such wishful thinking by having independent panels of experts decide what is structural and what is cyclical.

JEL-codes: E62 F41 H50 O54 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://research.hks.harvard.edu/publications/work ... ?PubId=7646&type=WPN

Related works:
Journal Article: A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries (2011)
Working Paper: A Lesson From the South for Fiscal Policy in the US and Other Advanced Countries (2011)
Working Paper: A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp11-014

Access Statistics for this paper

More papers in Working Paper Series from Harvard University, John F. Kennedy School of Government Contact information at EDIRC.
Bibliographic data for series maintained by ().