Automatic Fiscal Stabilizers

Author/Editor:

Steven A. Symansky ; Thomas Baunsgaard

Publication Date:

September 28, 2009

Electronic Access:

Free Full Text (PDF file size is 478 KB).Use the free Adobe Acrobat Reader to view this PDF file

Summary:

This paper discusses how to enhance automatic stabilizers without increasing the size of government. We distinguish between permanent changes in the parameters of the tax and expenditure system (e.g., changes in tax progressivity) that will enhance the traditional automatic stabilizer, and temporary changes triggered by certain economic developments (e.g., tax measures targeted at credit and liquidity constrained households, triggered during a severe downturn). We argue that, with some exceptions, the latter are preferable as they can be implemented with lower disruptions in other fiscal policy goals (e.g., economic efficiency). Moreover, countries should also avoid introducing procyclicality as a result of fiscal rules, as these would offset the effect of existing automatic stabilizers.

Series:

Staff Position Note No. 2009/23

Subject:

Frequency:

Annually

English

Publication Date:

September 28, 2009

ISBN/ISSN:

9781455290567/2072-3202

Stock No:

SPNEA2009023

Price:

$10.00 (Academic Rate:$10.00)

Format:

Paper

Pages:

26

Please address any questions about this title to publications@imf.org