Automatic Stabilisation, Discretionary Policy and the Stability Pact - Sciences Po Accéder directement au contenu
Pré-Publication, Document De Travail Année : 2008

Automatic Stabilisation, Discretionary Policy and the Stability Pact

Résumé

This paper describes recent trends on the efficiency of stabilisers in the European Union. Using both macro evidence on the cyclical sensitivity of budget deficit to economic activity, and micro evidence on the tax and expenditure profiles, we conclude, in agreement with the recent literature, that the importance of automatic stabilisation has decreased. After remarking that this trend is contradictory with the current economic institutions of Europe relying exclusively on automatic stabilisation for the conduct of fiscal policy, we argue that increasing flexibility, one alternative way to reduce cyclical fluctuations, does not seem a viable path. The paper concludes defending the appropriateness of discretionary fiscal policy. We argue by means of a simple model that the theoretical arguments against its use are not conclusive, and we describe a recent stream of literature, based on structural VAR models, that concludes rather robustly for the effectiveness of discretionary fiscal policy in the short and long run.
Fichier principal
Vignette du fichier
wp2008-15.pdf (645.68 Ko) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)
Loading...

Dates et versions

hal-00973049 , version 1 (03-04-2014)

Identifiants

  • HAL Id : hal-00973049 , version 1
  • SCIENCESPO : 2441/6152

Citer

Jérôme Creel, Francesco Saraceno. Automatic Stabilisation, Discretionary Policy and the Stability Pact. 2008. ⟨hal-00973049⟩
82 Consultations
218 Téléchargements

Partager

Gmail Facebook X LinkedIn More