Countercyclical Fiscal Policy: A Review of the Literature, Empirical Evidence and some Policy Proposals

Carlos Budnevich

No DP2002-41, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: For many emerging market economies, over reliance on monetary policy may bring worse macro results, when compared to a more balanced framework of countercyclical fiscal and monetary policy. The use of countercyclical fiscal policy requires as a precondition solvent and sustainable fiscal accounts and the re-engineering of fiscal institutions to increase the timeliness and flexibility of fiscal policy. A higher degree of tax or pension fund and/or unemployment insurance contribution flexibility may help in economies subject to significant external shocks.

Keywords: Business cycles; Fiscal policy; Keynesian economics; Monetary policy; Taxation (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (2)

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