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Government Size and Automatic Stabilizers: International and Intranational Evidence

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  • Fatás, Antonio
  • Mihov, Ilian

Abstract

This paper studies the role of automatic stabilizers using a sample of OECD countries and US states. We find that there is a strong and robust negative correlation between measures of government size and the volatility of output. This correlation is robust to the inclusion of a large set of controls as well as to alternative methods of detrending and estimation. The economic significance of this relationship is larger for the US states.

Suggested Citation

  • Fatás, Antonio & Mihov, Ilian, 1999. "Government Size and Automatic Stabilizers: International and Intranational Evidence," CEPR Discussion Papers 2259, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2259
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    References listed on IDEAS

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    More about this item

    Keywords

    Automatic Stabilizers; Business Cycles; Fiscal Policy; Intranational Economics;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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