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RESEARCH PRODUCT

Fiscal Policy Responsiveness, Persistence and Discretion

Davide FurceriDavide FurceriAntónio AfonsoAntónio AfonsoLuca AgnelloLuca Agnello

subject

Economic ConditionsGovernment spendingPersistence (psychology)EstimationEconomics and EconometricsGovernment SpendingSociology and Political Sciencemedia_common.quotation_subjectGovernment RevenueFiscal Policy Fiscal VolatilitySettore SECS-P/02 Politica EconomicaFiscal policy fiscal volatilityMonetary economicsDiscretionFiscal policyFiscal PolicyGovernment revenuehealth care economics and organizationsmedia_commonPublic finance

description

This paper analyzes the different characteristics of fiscal policy using a two-step estimation procedure. First, we decompose both government spending and government revenue into three components: responsiveness, persistence and discretion. Second, we assess the determinants of these characteristics. Using data from 132 countries, our results show that fiscal policy is more persistent than responsive to economic conditions, which implies that the authorities may have less leeway in the short-run notably to curb spending behavior. In addition, countries characterized by greater fiscal persistence have less discretion and responsiveness. Finally, macroeconomic, institutional and geographic variables explain cross-country variation in fiscal characteristics. info:eu-repo/semantics/publishedVersion

yearjournalcountryeditionlanguage
2008-10-01SSRN Electronic Journal
https://doi.org/10.2139/ssrn.1284926