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Varieties of capitalism and varieties of macroeconomic policy. Are some economies more procyclical than others?

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  • Amable, Bruno
  • Azizi, Karim

Abstract

The role of macroeconomic policy in the different varieties of capitalism has been largely ignored. Recent contributions to the literature have argued that nonliberal economies should be expected to have less accommodating (i.e., less countercyclical) macroeconomic policies than liberal varieties. Using time-series cross-section data on 18 OECD countries between 1980 and 2002, this paper tests that hypothesis and, more particularly, whether the reaction of discretionary fiscal policy to macroeconomic shocks is conditioned by variables that differentiate liberal from nonliberal varieties of capitalism: the degree of generosity of the social protection system, the degree of coordination of wage bargaining, and the fragmentation of the political party system. The test results do not support the conclusion that nonliberal economies' macroeconomic policy would be less countercyclical than that of liberal economies. On the contrary, discretionary fiscal policy has been more countercyclical in countries with a fragmented political system or a generous social protection system.

Suggested Citation

  • Amable, Bruno & Azizi, Karim, 2011. "Varieties of capitalism and varieties of macroeconomic policy. Are some economies more procyclical than others?," MPIfG Discussion Paper 11/6, Max Planck Institute for the Study of Societies.
  • Handle: RePEc:zbw:mpifgd:116
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    References listed on IDEAS

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    1. Nathalie Girouard & Christophe André, 2005. "Measuring Cyclically-adjusted Budget Balances for OECD Countries," OECD Economics Department Working Papers 434, OECD Publishing.
    2. Bruno Amable & Donatella Gatti & Jan Schumacher, 2006. "Welfare-State Retrenchment: The Partisan Effect Revisited," Oxford Review of Economic Policy, Oxford University Press, vol. 22(3), pages 426-444, Autumn.
    3. Amable, Bruno, 2003. "The Diversity of Modern Capitalism," OUP Catalogue, Oxford University Press, number 9780199261147.
    4. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 609-657.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Socialist economies smooth better the cycle
      by Economic Logician in Economic Logic on 2011-06-17 19:24:00

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    Cited by:

    1. Ahlborn, Markus & Ahrens, Joachim & Schweickert, Rainer, 2016. "Large-scale transition of economic systems: Do CEECs converge towards western prototypes?," Center for European, Governance and Economic Development Research Discussion Papers 280, University of Goettingen, Department of Economics.
    2. Ahrens, Joachim & Schweickert, Rainer & Zenker, Juliane, 2011. "Varieties of capitalism, governance and government spending: A cross-section analysis," PFH Forschungspapiere/Research Papers 2011/01, PFH Private University of Applied Sciences, Göttingen.
    3. Azizi, Karim & Canry, Nicolas & Chatelain, Jean-Bernard & Tinel, Bruno, 2013. "Government Solvency, Austerity and Fiscal Consolidation in the OECD: A Keynesian Appraisal of Transversality and No Ponzi Game Conditions," EconStor Preprints 72550, ZBW - German National Library of Economics.
    4. Ahlborn, Markus & Ahrens, Joachim & Schweickert, Rainer, 2014. "Large-scale transition of economic systems: Do CEECs converge towards western prototypes?," PFH Forschungspapiere/Research Papers 2014/05, PFH Private University of Applied Sciences, Göttingen.
    5. Joscha Beckmann & Marek Endrichs & Rainer Schweickert, 2016. "Government activity and economic growth – one size fits All?," International Economics and Economic Policy, Springer, vol. 13(3), pages 429-450, July.
    6. Hiroshi Nishi, 2014. "Varieties of economic growth regimes, types of macroeconomic policies and policy regimes: a post-Keynesian analysis," Chapters,in: Economic Crises and Policy Regimes, chapter 5, pages 101-123 Edward Elgar Publishing.
    7. Rainer Schweickert & Markus Ahlborn & Karol Frank & Ágnes Orosz & Ivana Sikulová & Miklós Szanyi, 2013. "Large-Scale Transformation of Socio-Economic Institutions - Comparative Case Studies on CEECs. Interim Report," WWWforEurope Working Papers series 16, WWWforEurope.
    8. Kalinowski, Thomas, 2013. "Crisis management and the varieties of capitalism: Fiscal stimulus packages and the transformation of East Asian state-led capitalism since 2008," Discussion Papers, Project Group Modes of Economic Governance SP III 2013-501, Social Science Research Center Berlin (WZB).
    9. Karim Azizi & Nicolas Canry & Jean-Bernard Chatelain & Bruno Tinel, 2012. "Are No-Ponzi Game and Transversality Conditions Relevant for Public Debt? A Keynesian Appraisal," Working Papers wp296, Political Economy Research Institute, University of Massachusetts at Amherst.
    10. Esther Ademmer & Joscha Beckmann & Rainer Schweickert, 2014. "Large-scale Transformations of Socio-economic Institutions," WWWforEurope Working Papers series 75, WWWforEurope.
    11. Ahlborn, Markus & Ahrens, Joachim & Schweickert, Rainer, 2014. "Large-scale transition of economic systems: Do CEECs converge towards Western prototypes?," Kiel Working Papers 1976, Kiel Institute for the World Economy (IfW).

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