Why is fiscal policy often procyclical?
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Author
Contributions
- Tabellini, Guido Enrico, 1956- - Contributor
- National Bureau of Economic Research. - Contributor
Publication
2005 - National Bureau of Economic Research, Cambridge, Mass, Massachusetts
Language
English
Word Count
6,750 words, Guess
Page Count
27 pages
Identifiers
- OCLC Control Number61856684
- Open LibraryOL17627845M
Classifications
- LCCHB1
Description
"Many countries, especially developing ones, follow procyclical fiscal polices, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less-than-benevolent government to appropriate rents. Voters have incentives similar to the "starving the Leviathan" classic argument, and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well. We test this argument against more traditional explanations based purely on borrowing constraints, with a reasonable amount of success"--National Bureau of Economic Research web site.
Subjects
Series Statement
- NBER working paper paper series -- no. 11600.
- Working paper series (National Bureau of Economic Research) -- working paper no. 11600.
Links
Other Editions
- Why is fiscal policy often procyclical?
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