The Cyclical Behaviour of Fiscal Surpluses in The OECD Countries – A Panel Study
AbstractThe main objective of this paper is to examine differences in the cyclical behaviour of fiscal policy in the OECD countries empirically using a new method developed to compare directly the explanatory power of two groups of theories that try to explain why some countries run pro-cyclical fiscal policies. The analysis shows that stronger anticyclical fiscal policies are typically run by countries with better institutions, lower deficits, and a lower stock of public debt. However, the index of regulatory quality performs best in explaining the variance of output elasticity of budget surpluses, which contradicts the conventional view that financial constraints are the main reason behind fiscal procyclicality.
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Bibliographic InfoPaper provided by Institute of Economics, University of Lodz in its series Working Papers with number 0100.
Length: 32 pages
Date of creation: Jan 2006
Date of revision: Jul 2006
procyclical fiscal policy; stabilization policy; panel estimation;
Find related papers by JEL classification:
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-23 (All new papers)
- NEP-MAC-2006-09-23 (Macroeconomics)
- NEP-PBE-2006-09-23 (Public Economics)
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