Advanced Search
MyIDEAS: Login to save this paper or follow this series

Cyclicality of Fiscal Policy over the Business Cycle: an Empirical Study on Developed and Developing Countries

Contents:

Author Info

  • Bogdan Bogdanov

    ()
    (American University in Bulgaria)

Abstract

This paper presents strong empirical evidence that automatic stabilizers and countercyclical fiscal policy decrease output volatility. The conducted empirical analysis proves the economic intuition that the automatic fiscal stance is countercyclical, regardless of the size and the prosperity of the economy. Connecting our empirical results to the Endogenous Growth Theory, we develop the idea that countercyclical fiscal policy boosts long-term economic growth. We conduct the study on two samples of countries – developed and developing. We recognize the fiscal policy pattern of the developed nations to be countercyclical, whereas the one of the developing countries to be acyclical. The derived results support our hypothesis that countercyclical fiscal policy reduces output volatility as the volatility of per capita output of the developed nations appear significantly less than the one of the developing countries. We identify possible determinants of fiscal policy in good and bad times. We empirically recognize that openness to trade, terms of trade, level of corruption and financial development affect fiscal policy in both samples of countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.minfin.bg/document/9142:1
File Function: Main text
Download Restriction: no

Bibliographic Info

Paper provided by Agency for Economic Analysis and Forecasting in its series Working paper series with number 12010en.

as in new window
Length: 54 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:eaf:wpaper:12010en

Contact details of provider:
Postal: 31 Aksakov St., 1000 Sofia
Phone: (+359-2) 9859 5601
Fax: (+359-2) 981 33 58
Email:
Web page: http://www.aeaf.minfin.bg/
More information through EDIRC

Related research

Keywords: fiscal policy; automatic stabilizers; discretionary policy; output volatility; determinants;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Anita Angelovska Bezovska & Jane Bogoev & Ana Mitreska & Maja Kadievska Vojnovik, 2011. "Investigating the Cyclical Behavior of Fiscal Policy in the Republic of Macedonia during the Period of Transition," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 13(1), pages 57-104, April.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eaf:wpaper:12010en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kiril Vassilev).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.