Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/206687
Authors: 
Şen, Hüseyin
Kaya, Ayşe
Year of Publication: 
2019
Abstract: 
In this paper, we explore the output-volatility reducing role of automatic stabilizers in the nine EMU member states comprising Austria, Finland, France, Germany, Ireland, Italy, Portugal, the Netherlands, and Spain for the period 1995-2017. Overall, the empirical results obtained by using the Pooled Mean Group estimator proposed by Pesaran et al. (1999) suggest that automatic stabilizers deliver a significant counter-effect on output volatility measured by the real GDP per capita volatility in the short run. More specifically, output-volatility responses to automatic stabilizers by a reduction between -1.2 and -9.7 percentage points depending on the proxy measure used for automatic stabilizers. However, the output-volatility reducing effect of automatic stabilizers is statistically insignificant in the long run. The results support the view that automatic stabilizers are an important fiscal mechanism for the short-run output stabilization, but their output-volatility offsetting role is largely subject to what the proxy measures are used for automatic stabilizers.
Subjects: 
Automatic stabilizers
Fiscal policy
PMG estimator
EMU member states
JEL: 
E31
E32
E62
Document Type: 
Working Paper

Files in This Item:





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.