Automatic Fiscal Stabilizers in France

Author/Editor: Di Bella, Gabriel
Publication Date: November 01, 2002
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: In this paper, a simple methodology to assess the effectiveness of automatic stabilizers is proposed and empirically tested using French data for the period 1970-2000. The paper concludes that fiscal stabilizers have dampened output variability by approximately 35 45 percent depending on the measure of potential output used. In addition, the results indicate that fiscal stabilizers mainly operated through the reduction of private investment fluctuations from 1970 to 1985, and through the reduction of private consumption variability thereafter. Due to the counterfactual nature of the analysis performed, the simplicity of the theoretical model, and simultaneity issues that might introduce biases, the results can at most be interpreted as approximations of the phenomenon that is analyzed.
Series: Working Paper No. 02/199
Subject(s): Fiscal policy | France

Author's Keyword(s): Automatic stabilizers | fiscal policy | France
Publication Date: November 01, 2002
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA1992002 Pages: 36
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