Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153388
Authors: 
Afonso, António
Agnello, Luca
Furceri, Davide
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper 954
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.
Subjects: 
Fiscal Policy
Fiscal Volatility
JEL: 
E62
H50
Document Type: 
Working Paper

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