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Title:Fiscal policy reaction to the cycle in the OECD: Pro- or counter-cyclical? PDF Logo
Authors:Égert, Balázs
Issue Date:2012
Series/Report no.:CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3777
Abstract:This paper analyses the reaction of fiscal policy to the cycle in OECD countries. The results suggest that while overall government balances were counter-cyclical in the past and more so in economic downturns than in upswings, discretionary fiscal policy was neutral on average. However, discretionary fiscal policy appears to react to the cycle in a non-linear fashion: fiscal policy in countries with high public debt and high government deficits tends to be pro-cyclical, while countries that have low public debt and that have surpluses are more likely to conduct a counter-cyclical fiscal policy. The paper also finds that asset prices have a significant impact on government balances.
Subjects:fiscal policy
pro-cyclicality
counter-cyclicality
OECD countries
JEL:E32
E62
H21
H30
H60
C33
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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