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Title:An estimated fiscal Taylor rule for the postwar United States PDF Logo
Authors:Reicher, Christopher Phillip
Issue Date:2011
Series/Report no.:Kiel Working Papers 1705
Abstract:This paper documents the systematic response of postwar U.S. fiscal policy to fiscal imbalances and the business cycle using a multivariate Fiscal Taylor Rule. Adjustments to taxes and purchases both account for a large portion of the fiscal response to debt, while authorities seem reluctant to adjust transfers. As expected, taxes are highly procyclical; purchases are acyclical; and transfers are countercyclical. Neither pattern has changed much over time, except that adjustment happens more slowly after 1981 than before 1980. The role of adjustments to purchases in stabilizing the debt indicates that the recent discussion about spending reversals is highly relevant.
Subjects:Spending reversals
Fiscal Taylor Rule
deficits
fiscal policy
taxes
spending
transfer payments
JEL:E62
E63
H20
H62
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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