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Automatic Fiscal Stabilizers Author/Editor: Baunsgaard, Thomas | Symansky, Steven A. Published: September 28, 2009 Electronic Access: Free Full Text (PDF file size is 490KB) 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(s): Budgets | Business cycles | Corporate sector | Fiscal management | Fiscal policy | Fiscal stability | Government expenditures | Income taxes | Private sector | Progressive taxation | Stabilization measures | Tax policy Author's keyword(s): Fiscal policy | automatic stabilizers | business cycle fluctuations | fiscal rules | budget | expenditure policy | tax policy | fiscal federalism | macroeconomic stabilization   English       Published:   September 28, 2009             ISBN/ISSN:   978-1-58906-908-4   Format:   A web quality merged PDF     Stock No:   SPNET2009023                                 Please address any questions about this title to publications@imf.org.