Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212768
Authors: 
Eller, Markus
Fidrmuc, Jarko
Fungáčová, Zuzana
Year of Publication: 
2013
Series/Report no.: 
BOFIT Discussion Papers No. 13/2013
Abstract: 
This paper investigates the relationship between fiscal policy and output volatility in Russian regions between 2000 and 2009. System GMM estimation techniques are used to account for potential endogeneity between output volatility and fiscal developments. Our main finding is that fiscal activism, proxied by various measures of discretionary fiscal policy, contributes to output volatility and so induces macroeconomic instability at the regional level in Russia. This result corroborates previous studies using cross-country data. To reduce business cycle fluctuations, it would be necessary to curtail pro-cyclical fiscal activism at the regional level, e.g. via fiscal rules and sound institutions of fiscal federalism.
Subjects: 
output volatility
automatic stabilizers
discretionary fiscal policy
dynamic panel models
Russia
JEL: 
E32
E62
R11
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-16-5
Document Type: 
Working Paper

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