IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-06h10001.html
   My bibliography  Save this article

Does globalization enhance the role of fiscal policy in economic stabilization?

Author

Listed:
  • Alena Kimakova

    () (York University)

Abstract

This note proposes a research agenda for studying the implications of enhanced capital mobility and limited de facto exchange rate flexibility for the conduct of macroeconomic stabilization. The ineffectiveness of monetary policy under such conditions suggests a greater role for fiscal policy as a stabilization instrument. The paper outlines a methodology for empirically verifying whether financially more open economies with a preference for exchange rate regimes with limited de facto flexibility implement a more counter-cyclical fiscal policy. Empirical testing of this hypothesis at the cross-national level is nonetheless hindered by data availability. Statistics on cyclically adjusted budget balances are typically available for OECD member countries only, but this sample offers little variation in terms of de facto exchange rate regime choice.

Suggested Citation

  • Alena Kimakova, 2006. "Does globalization enhance the role of fiscal policy in economic stabilization?," Economics Bulletin, AccessEcon, vol. 8(11), pages 1-11.
  • Handle: RePEc:ebl:ecbull:eb-06h10001
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2006/Volume8/EB-06H10001A.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Fatas, Antonio & Mihov, Ilian, 2001. "Government size and automatic stabilizers: international and intranational evidence," Journal of International Economics, Elsevier, vol. 55(1), pages 3-28, October.
    2. Dalia S Hakura, 2005. "Are Emerging Market Countries Learning to Float?," IMF Working Papers 05/98, International Monetary Fund.
    3. Hausmann, Ricardo & Panizza, Ugo & Stein, Ernesto, 2001. "Why do countries float the way they float?," Journal of Development Economics, Elsevier, vol. 66(2), pages 387-414, December.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
    5. Eduardo Levy-Yeyati & Federico Sturzenegger, 2003. "To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes on Growth," American Economic Review, American Economic Association, vol. 93(4), pages 1173-1193, September.
    6. Persson, Torsten & Tabellini, Guido, 1999. "The size and scope of government:: Comparative politics with rational politicians," European Economic Review, Elsevier, vol. 43(4-6), pages 699-735, April.
    7. Paul van den Noord, 2000. "The Size and Role of Automatic Fiscal Stabilizers in the 1990s and Beyond," OECD Economics Department Working Papers 230, OECD Publishing.
    8. Bouthevillain, C. & Van Den Dool, G. & Langenus, G. & Mohr, M. & Momigliano, S. & Tujula, M. & De Cos, P.H. & Cour-Thimann, Philippine, 2001. "Cyclically Adjusted Budget Balances: an Alternative Approach," Papers 77, Quebec a Montreal - Recherche en gestion.
    9. Tridimas, George & Winer, Stanley L., 2005. "The political economy of government size," European Journal of Political Economy, Elsevier, vol. 21(3), pages 643-666, September.
    10. Alberto Alesina & Roberto Perotti, 1995. "The Political Economy of Budget Deficits," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 1-31, March.
    11. Claude Giorno & Pete Richardson & Deborah Roseveare & Paul van den Noord, 1995. "Estimating Potential Output, Output Gaps and Structural Budget Balances," OECD Economics Department Working Papers 152, OECD Publishing.
    12. Helene Poirson Ward, 2001. "How Do Countries Choose their Exchange Rate Regime?," IMF Working Papers 01/46, International Monetary Fund.
    13. repec:hrv:faseco:34721963 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-06h10001. 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: (John P. Conley). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.