Fiscal Policy Responsiveness, Persistence, and Discretion
Afonso, António.
Fiscal Policy Responsiveness, Persistence, and Discretion [electronic resource] / Réaction au cycle, persistance et effet discrétionnaire de la politique budgétaire António Afonso, Luca Agnello and Davide Furceri = Réaction au cycle, persistance et effet discrétionnaire de la politique budgétaire / António Afonso, Luca Agnello et Davide Furceri - Paris : OECD Publishing, 2008. - 34 p. ; 21 x 29.7cm. - OECD Economics Department Working Papers, no.659 18151973 ; . - OECD Economics Department Working Papers, no.659. .
In this working paper, we decompose fiscal policy in three components: i) responsiveness, ii) persistence and iii) discretion. Using a sample of 132 countries, our results point out that fiscal policy tends to be more persistent than responding to output variations. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence, suggesting that countries with higher persistence have lower discretion and vice versa. In particular, while government size, country size and income have negative effects on the discretion component of fiscal policy, they tend to increase fiscal policy persistence.
Economics
Fiscal Policy Responsiveness, Persistence, and Discretion [electronic resource] / Réaction au cycle, persistance et effet discrétionnaire de la politique budgétaire António Afonso, Luca Agnello and Davide Furceri = Réaction au cycle, persistance et effet discrétionnaire de la politique budgétaire / António Afonso, Luca Agnello et Davide Furceri - Paris : OECD Publishing, 2008. - 34 p. ; 21 x 29.7cm. - OECD Economics Department Working Papers, no.659 18151973 ; . - OECD Economics Department Working Papers, no.659. .
In this working paper, we decompose fiscal policy in three components: i) responsiveness, ii) persistence and iii) discretion. Using a sample of 132 countries, our results point out that fiscal policy tends to be more persistent than responding to output variations. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence, suggesting that countries with higher persistence have lower discretion and vice versa. In particular, while government size, country size and income have negative effects on the discretion component of fiscal policy, they tend to increase fiscal policy persistence.
Economics