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On the effectiveness and limits of fiscal stabilizers

Author

Listed:
  • Jesus Crespo Cuaresma
  • Gerhard Reitschuler
  • Maria Antoinette Silgoner

Abstract

The smoothing impact of fiscal stabilizers (proxied by government expenditures) on business cycle volatility is studied for a panel of European Union (EU) countries in the period 1970-1999. Special emphasis is put on the investigation of possible nonlinearities in the relationship between Gross Domestic Product (GDP) growth volatility and fiscal stabilizers. The results show that the business cycle volatility smoothing effect of fiscal stabilizers may revert at high levels. The results hold when using government revenues as a proxy for fiscal stabilizers.

Suggested Citation

  • Jesus Crespo Cuaresma & Gerhard Reitschuler & Maria Antoinette Silgoner, 2009. "On the effectiveness and limits of fiscal stabilizers," Applied Economics, Taylor & Francis Journals, vol. 43(9), pages 1079-1086.
  • Handle: RePEc:taf:applec:v:43:y:2009:i:9:p:1079-1086
    DOI: 10.1080/00036840802600251
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    References listed on IDEAS

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    1. 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.
    2. Marco Buti & Paul Van den Noord, 2003. "What is the impact of tax and welfare reforms on fiscal stabilisers? A simple model and an application to EMU," European Economy - Economic Papers 2008 - 2015 187, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Karl Aiginger, 2011. "Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 35-52, August.
    2. Checherita-Westphal, Cristina & Attinasi, Maria Grazia & Rieth, Malte, 2011. "Labour tax progressivity and output volatility: evidence from OECD countries," Working Paper Series 1380, European Central Bank.
    3. repec:taf:regstd:v:50:y:2016:i:11:p:1849-1862 is not listed on IDEAS
    4. Volker Ziemann, 2013. "Do Structural Policies Affect Macroeconomic Stability?," OECD Economics Department Working Papers 1075, OECD Publishing.
    5. Markus Eller & Jarko Fidrmuc & Zuzana Fungáčová, 2016. "Fiscal Policy and Regional Output Volatility: Evidence from Russia," Regional Studies, Taylor & Francis Journals, vol. 50(11), pages 1849-1862, November.

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