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Fiscal Stabilisation Policy and Fiscal Institutions

Author

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  • Campbell Leith

    (University of Glasgow)

  • Simon Wren-lewis

    (University of Exeter)

Abstract

In this paper we analyse countercyclical fiscal policy within the context of a microfounded analysis of business cycle stabilisation. We show that tax and spending instruments can have a useful counter cyclical role, even after allowing for the distortionary nature of the instruments and the need for debt sustainability. A critical barrier to the use of fiscal instruments may be political economy concerns, and we survey recent suggestions involving alternative fiscal policy institutions.

Suggested Citation

  • Campbell Leith & Simon Wren-lewis, 2006. "Fiscal Stabilisation Policy and Fiscal Institutions," WEF Working Papers 0007, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    • Handle: RePEc:wef:wpaper:0007
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    References listed on IDEAS

    as
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The UK is well ahead of the US and the EU in its use of fiscal rules
      by Managing Editor in British Politics and Policy at LSE on 2012-12-11 14:00:52
    2. The UK is well ahead of the US and the EU in its use of fiscal rules.
      by Blog Admin in EUROPP European Politics and Policy on 2012-12-15 17:00:38
    3. Some Thoughts on Fiscal Rules
      by Mainly Macro in Mainly Macro on 2012-12-10 05:41:00

    Citations

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    Cited by:

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    2. Boris Hofmann & Marco Jacopo Lombardi & Benoit Mojon & Athanasios Orphanides, 2021. "Fiscal and monetary policy interactions in a low interest rate world," BIS Working Papers 954, Bank for International Settlements.
    3. Malcolm Sawyer, 2011. "Re-thinking Macroeconomic Policies," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 13, Edward Elgar Publishing.
    4. Philip Arestis & John McCombie, 2009. "On The Effectiveness Of Fiscal Policy As An Instrument Of Macroeconomic Policy," Economic Affairs, Wiley Blackwell, vol. 29(1), pages 77-79, March.
    5. Felicity C Barker & Robert A Buckle & Robert W St Clair, 2008. "Roles of Fiscal Policy in New Zealand," Treasury Working Paper Series 08/02, New Zealand Treasury.
    6. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    7. Kamal, Mona, 2015. "Egypt Relative to the COMESA’s Member States: Do Fiscal Policy Rules Matter?," MPRA Paper 67101, University Library of Munich, Germany.
    8. Huixin Bi & Eric M. Leeper, 2010. "Sovereign Debt Risk Premia and Fiscal Policy in Sweden," NBER Working Papers 15810, National Bureau of Economic Research, Inc.
    9. Philip Arestis, 2011. "Fiscal Policy Is Still an Effective Instrument of Macroeconomic Policy," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(2), pages 143-156, June.
    10. Bowen, Alex & Stern, Nicholas, 2010. "Environmental policy and the economic downturn," LSE Research Online Documents on Economics 37589, London School of Economics and Political Science, LSE Library.
    11. Christopher Allsopp & David Vines, 2005. "The Macroeconomic Role of Fiscal Policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(4), pages 485-508, Winter.

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