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.

Afonso, A., Agnello, L., & Furceri, D. (2010). Fiscal policy responsiveness, persistence, and discretion. PUBLIC CHOICE, 145(3/4), 503-530 [10.1007/s11127-009-9577-x].

Fiscal policy responsiveness, persistence, and discretion

AGNELLO, Luca;FURCERI, Davide
2010

Abstract

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.
Settore SECS-P/02 Politica Economica
Afonso, A., Agnello, L., & Furceri, D. (2010). Fiscal policy responsiveness, persistence, and discretion. PUBLIC CHOICE, 145(3/4), 503-530 [10.1007/s11127-009-9577-x].
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10447/65647
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