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 to respond to output conditions. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence thereby 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.

Afonso, A., Agnello, L., Furceri, D. (2008). Fiscal policy responsiveness, persistence and discretion, 954.

Fiscal policy responsiveness, persistence and discretion

AGNELLO, Luca;FURCERI, Davide
2008-01-01

Abstract

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 to respond to output conditions. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence thereby 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.
Settore SECS-P/02 Politica Economica
http://www.ecb.int/pub/pdf/scpwps/ecbwp954.pdf
Afonso, A., Agnello, L., Furceri, D. (2008). Fiscal policy responsiveness, persistence and discretion, 954.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10447/65615
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