Restraining Yourself: Fiscal Rules and Stabilization
Summary:
State budgets in the United States played a significant macroeconomic role in the 1970s and 1980s, and the level of cyclical responsiveness was affected by the severity of statutory and constitutional fiscal restraints. Moving from no fiscal restraints to the most stringent restraints lowered the fiscal offset to income fluctuations by around 40 percent. Simulations indicate that a reduction in aggregate fiscal stabilizers of this size could lead to a significant increase in the variance of aggregate output.
Series:
Working Paper No. 1994/082
Subject:
Budget planning and preparation Expenditure Fiscal policy Fiscal stabilization Fiscal stance Public financial management (PFM)
Notes:
Also published in Staff Papers, Vol. 42, No. 1, March 1995.
English
Publication Date:
July 1, 1994
ISBN/ISSN:
9781451954708/1018-5941
Stock No:
WPIEA0821994
Pages:
24
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