Counter-Cyclical Economic Policy

Sutherland, Douglas; Hoeller, Peter; Égert, Balázs; Roehn, Oliver

doi:10.2139/ssrn.1604410

Cited by 24 publications

(17 citation statements)

References 143 publications

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“…Egert (2010) provides a detailed analysis of the cyclicality of the fiscal stance in the OECD countries and confirms that it is counter-cyclical in this group of countries. Sutherland et al (2010) reach the same conclusion but also find that the size of the counter-cyclical response of discretionary fiscal policy depends on the initial fiscal stance and debt level. Discretionary fiscal policy seems to be pro-cyclical in some countries and counter-cyclical in others, and it reacts to the cycle in a non-linear way, depending on the size of the debt stock.…”

Section: Related Literaturesupporting

confidence: 58%

The European debt crisis and fiscal reactions in Europe 2000–2014

Baldi

Stæhr

2015

Int Econ Econ Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: After the outbreak of the global financial crisis, some governments in the EU experienced serious fiscal problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data for the pre-crisis period 2001-2008 and for the crisis period 2009-2014. The pre-crisis estimations reveal some differences in persistence and cyclical reaction between different groups of countries, but generally little feedback from the debt stock to the primary balance. The fiscal reaction functions of the countries that eventually developed fiscal problems do not stand out. The estimations on data from the crisis period show largely unchanged persistence and counter-cyclicality but much more feedback from the debt stock, and this applies both to the crisis countries and those less affected. In spite of large deficits and accumulation of debt, the underlying fiscal reaction has become more prudent after the outbreak of the European debt crisis. Terms of use: Documents inJEL codes: E61, E62, H62, H63

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Section: Related Literaturesupporting

confidence: 58%

The European debt crisis and fiscal reactions in Europe 2000–2014

Baldi

Stæhr

2015

Int Econ Econ Policy

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“…Egert (2010) provides a detailed analysis of the cyclicality of the fiscal stance in the OECD member states and confirms that it is counter-cyclical in these countries. Sutherland et al (2010) reach the same result but also find that the size of the counter-cyclical response of discretionary fiscal policy depends on the initial fiscal stance and debt level. Discretionary fiscal policy seems to be pro-cyclical in some countries and counter-cyclical in others, and it reacts to the cycle in a non-linear way, depending on the size of the debt stock.…”

Section: Related Literaturesupporting

confidence: 59%

The European Debt Crisis and Fiscal Reaction Functions in Europe 2000-2012

Baldi

Stæhr

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: After the global financial crisis, some governments in the EU experienced serious debt financing problems, while others were less affected. This paper seeks to shed light on the divergent fiscal performance by assessing the fiscal conduct in the EU countries before and after the outbreak of the crisis. Fiscal reaction functions of the primary balance are estimated for different groups of EU countries using quarterly data for the pre-crisis period 2001-2008 and for the post-crisis period 2009-2012. The pre-crisis estimations reveal some differences in persistence and cyclical reaction between different groups of countries, but generally little feedback from the debt stock to the primary balance. The countries that eventually developed fiscal problems do not stand out. The post-crisis estimations show less counter-cyclicality and much more feedback from the debt stock, and these reactions are particularly pronounced for the countries with severe fiscal problems. Terms of use: Documents inJEL codes: E61, E62, H62, H63

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“…Botman et al (2007) for a discussion on the dynamic effects of fiscal reforms based on the IMF Global Fiscal Model, and see Sutherland et al (2010) for in-depth review of fiscal multipliers. Recent empirical work, which largely confirms previous evidence (including OECD evidence, see Arnold, 2008;Sutherland et al, 2010) has provided a classification of taxes and expenditure categories according to their short and long-run growth effects (Gemmell et al 2011). Increases in government productive expenditure such as education and infrastructure and cuts in distortionary taxes such as taxes on labour and capital have the largest short-term fiscal multipliers.…”

mentioning

confidence: 99%

The Short-Term Effects of Structural Reforms

Bouis

Causa

Demmou

et al. 2012

OECD Economics Department Working Papers

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JT03318630Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Drawing on new empirical analysis of 30 years of structural reforms across the OECD, this paper sheds light on the impact of reforms over time, identifies the horizon over which their full effects materialise, and investigates whether such effects vary with prevailing economic conditions and institutions. Impulse responses of aggregate outcomes (GDP growth, employment rate) to various labour, product market and tax reforms are estimated at different horizons. This analysis indicates that the benefits from reforms typically take time to fully materialise. When significant effects are found in the short run, reforms seldom involve significant aggregate economic losses; on the contrary they often deliver some benefits. The absence of major depressing effects does not lend support to the view that reforms should be in general accompanied by substantial macroeconomic policy easing in order to deliver some short-term gains. Nevertheless, there is also tentative evidence that some labour market reforms (e.g. of unemployment benefit systems and job protection) pay off more quickly in good times than in bad times, and can even entail short-term losses in severely depressed economies.JEL classification: E02; E21; E22; E24; E60; J21; J23; J38; J58; J68.Key words: Institutions; reforms; labour market; product market; tax system; macroeconomic conditions; impulse response function. ********************************* L'impact à court terme des réformes structurelles : une analyse empiriqueCet article s'appuie sur des données portant sur trente années de reformes structurelles dans les pays de l'OCDE et analyse l'impact de ces reformes au cours du temps. Nous cherchons plus particulièrement à identifier l'horizon temporel à partir duquel ces effets se matérialisent ainsi qu'à déterminer la façon dont le positionnement dans le cycle économique ou les arrangements institutionnels en vigueur dans chaque pays affectent les résultats. L'analyse empirique repose sur l'estimation, à différents horizons temporels, de taux de réponse des variables de performances (taux de croissance du PIB, taux d'emploi) à des reformes mises en oeuvre dans le domaine fiscal, sur le marché du travail ainsi que sur le marché des produits. D'après nos résultats, les effets des reformes mettent généralement du temps à se matérialiser. Lorsque des effets significatifs sont obtenus dès le court terme, l'analyse indique que les réformes ne génèrent que très rarement des coûts macroéconomiques alors qu'un certain nombre d'entre elles produisent rapidement des bénéfices. L'absence d'effet récessif majeur semble donc infirmer l'idée selon laquelle les reformes devraient généralement être accompagnées de politiques macroéconomiques accommodantes permettant de compenser les...

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Counter-Cyclical Economic Policy

Abstract: Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format ECO/WKP(

Cited by 24 publications

References 143 publications

The European debt crisis and fiscal reactions in Europe 2000–2014

The European debt crisis and fiscal reactions in Europe 2000–2014

The European Debt Crisis and Fiscal Reaction Functions in Europe 2000-2012

The Short-Term Effects of Structural Reforms

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