Kiel Working Papers, Kiel Institute for World Economics
No 1850:
A set of estimated fiscal rules for a cross-section of countries: Stabilization and consolidation through which instruments?
Christopher Reicher
Abstract: This paper provides a set of detailed estimated fiscal
reaction functions for a panel of twenty industrialized countries, and it
discusses commonalities and differences with regard to systematic fiscal
policies across countries. In general, the countries in the panel adjust
tax revenues strongly in response to the public debt, and they adjust tax
revenues and transfer payments, but, interestingly, not tax rates, strongly
in response to output fluctuations. Some countries such as Germany appear
to adjust government consumption and investment relatively strongly in
response to the public debt, while the United States adjusts capital tax
rates relatively strongly. In general, an increased emphasis in the
theoretical literature on the effects of procyclical tax revenues and
countercyclical transfer payments as automatic stabilizers may be
warranted
Keywords: Fiscal policy, fiscal rule, deficits, taxes, government purchases, transfer payments; (follow links to similar papers)
JEL-Codes: E62,; E63,; H20,; H62; (follow links to similar papers)
25 pages, August 2013
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