Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications

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The paper revisits the empirical link between fiscal policy and macroeconomic stability. Our basic presumption is that by definition, the operation of automatic stabilizers should always and everywhere contribute to greater macroeconomic stability (output and consumption). However, two stylized fact...

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Autores principales: Debrun, Xavier, Kapoor, Radhicka
Formato: Artículo revista
Lenguaje:Inglés
Publicado: Instituto de Economía y Finanzas. Facultad de Ciencias Económicas. Universidada Nacional de Córdoba. 2010
Materias:
economic stabilization
fiscal policy
fiscal stability
E62
H6
estabilización económica
política fiscal
estabilidad fiscal
Acceso en línea:https://revistas.unc.edu.ar/index.php/REyE/article/view/4107
Aporte de:
Revistas de la UNC de Universidad Nacional de Córdoba
id I10-R10-article-4107
record_format ojs
spelling I10-R10-article-41072022-04-06T19:41:04Z Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications Política fiscal y estabilidad macroeconómica: Nuevas evidencias e implicaciones de política Debrun, Xavier Kapoor, Radhicka economic stabilization fiscal policy fiscal stability E62 H6 estabilización económica política fiscal estabilidad fiscal E62 H6 The paper revisits the empirical link between fiscal policy and macroeconomic stability. Our basic presumption is that by definition, the operation of automatic stabilizers should always and everywhere contribute to greater macroeconomic stability (output and consumption). However, two stylized facts seem at odds with that prediction. First, the moderating effect of automaticstabilizers appears to have weakened in advanced economies betweenthe mid-1990s and 2006 (the end of our main sample). Second, automatic stabilizers do not seem to be effective in developing economies. Our analysisaddresses these apparent puzzles by accounting for the government’s ambivalent role as a shock absorber and a shock inducer for determinants of macroeconomic volatility over time. Results provide strong support for theview that fiscal stabilization operates mainly through automatic stabilizers. Este documento retoma el estudio de la relación empírica entre la políticafiscal y la estabilidad macroeconómica. Nuestro supuesto básico es que, pordefinición, el funcionamiento de los estabilizadores automáticas deberíasiempre y en todas partes contribuir a una mayor estabilidad macroeconómica(producción y consumo). Sin embargo, dos hechos estilizados parecen estar endesacuerdo con esa predicción. En primer lugar, el efecto moderador de losestabilizadores automáticos parece haberse debilitado en las economíasavanzadas entre los años 1990 y 2006. En segundo lugar, los estabilizadoresautomáticos no parecen ser eficaces en las economías en desarrollo. Nuestroanálisis aborda estos enigmas aparentes por medio del análisis del papelambivalente del gobierno como un amortiguador e inductor de shocks sobrelos determinantes de la volatilidad macroeconómica en el tiempo. Losresultados proporcionan un fuerte apoyo a la opinión de que la estabilizaciónfiscal opera principalmente a través de los estabilizadores automáticos.   Instituto de Economía y Finanzas. Facultad de Ciencias Económicas. Universidada Nacional de Córdoba. 2010-12-01 info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion application/pdf https://revistas.unc.edu.ar/index.php/REyE/article/view/4107 Revista de Economía y Estadística; Vol. 48 No. 2 (2010); 69-101 Revista de Economía y Estadística; Vol. 48 Núm. 2 (2010); 69-101 2451-7321 0034-8066 10.55444/2451.7321.2010.v48.n2 eng https://revistas.unc.edu.ar/index.php/REyE/article/view/4107/5099 Derechos de autor 2010 Xavier Debrun, Radhicka Kapoor http://creativecommons.org/licenses/by-nc-nd/4.0
institution Universidad Nacional de Córdoba
institution_str I-10
repository_str R-10
container_title_str Revistas de la UNC
language Inglés
format Artículo revista
topic economic stabilization
fiscal policy
fiscal stability
E62
H6
estabilización económica
política fiscal
estabilidad fiscal
E62
H6
spellingShingle economic stabilization
fiscal policy
fiscal stability
E62
H6
estabilización económica
política fiscal
estabilidad fiscal
E62
H6
Debrun, Xavier
Kapoor, Radhicka
Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
topic_facet economic stabilization
fiscal policy
fiscal stability
E62
H6
estabilización económica
política fiscal
estabilidad fiscal
E62
H6
author Debrun, Xavier
Kapoor, Radhicka
author_facet Debrun, Xavier
Kapoor, Radhicka
author_sort Debrun, Xavier
title Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
title_short Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
title_full Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
title_fullStr Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
title_full_unstemmed Fiscal Policy and Macroeconomic Stability: New Evidence and Policy Implications
title_sort fiscal policy and macroeconomic stability: new evidence and policy implications
description The paper revisits the empirical link between fiscal policy and macroeconomic stability. Our basic presumption is that by definition, the operation of automatic stabilizers should always and everywhere contribute to greater macroeconomic stability (output and consumption). However, two stylized facts seem at odds with that prediction. First, the moderating effect of automaticstabilizers appears to have weakened in advanced economies betweenthe mid-1990s and 2006 (the end of our main sample). Second, automatic stabilizers do not seem to be effective in developing economies. Our analysisaddresses these apparent puzzles by accounting for the government’s ambivalent role as a shock absorber and a shock inducer for determinants of macroeconomic volatility over time. Results provide strong support for theview that fiscal stabilization operates mainly through automatic stabilizers.
publisher Instituto de Economía y Finanzas. Facultad de Ciencias Económicas. Universidada Nacional de Córdoba.
publishDate 2010
url https://revistas.unc.edu.ar/index.php/REyE/article/view/4107
work_keys_str_mv AT debrunxavier fiscalpolicyandmacroeconomicstabilitynewevidenceandpolicyimplications
AT kapoorradhicka fiscalpolicyandmacroeconomicstabilitynewevidenceandpolicyimplications
AT debrunxavier politicafiscalyestabilidadmacroeconomicanuevasevidenciaseimplicacionesdepolitica
AT kapoorradhicka politicafiscalyestabilidadmacroeconomicanuevasevidenciaseimplicacionesdepolitica
first_indexed 2022-08-20T00:57:18Z
last_indexed 2022-08-20T00:57:18Z
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