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Identifiers

doi
10.1787/228864226783

Fiscal Policy Responsiveness, Persistence, and Discretion

Flag for IGO OECD on December 17th 2008
Davide Furceri, António Afonso and Luca Agnello
In this working paper, we decompose fiscal policy in three components: i) responsiveness, ii) persistence and iii) discretion. Using a sample of 132 countries, our results point out that fiscal policy tends to be more persistent than responding to output variations. We also found that while the effect of cross-country covariates is positive (negative) for discretion, it is negative (positive) for persistence, suggesting that countries with higher persistence have lower discretion and vice versa. In particular, while government size, country size and income have negative effects on the discretion component of fiscal policy, they tend to increase fiscal policy persistence.

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Citations

Cited by 4 other policy documents (0 of them are from other policy sources)
 

Recognized names mentioned in this document

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Luca Agnello at University of Palermo
On page 6
Davide Furceri at University of Palermo
On page 6
António Afonso at University of Lisbon
On page 6