European Parliament Library

Fiscal Policy During Absorption Cycles, Ferhan Salman, Gabriela Dobrescu

Abstract
Domestic absorption cycles are relevant in assessment and design of fiscal policies. Our cross-country analysis covers 59 advanced and emerging countries for the 1990-2009 period. We show that ignoring domestic absorption cycles leads to biased fiscal stance indicators, for both advanced and emerging economies, by up to 1.5 percent of GDP. The estimates of fiscal policy reaction functions indicate that absorption booms are associated with pro-cyclical fiscal policy. We tackle the endogeneity problem in reactions functions through stripping the cyclical component of the fiscal aggregates. We also find that simple filtering methods in the computation of absorption gaps perform as better as indirect methods of estimating trade balance gaps and stripping of output gaps
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Background and literature review; III. Measuring Cross-Country Fiscal Stances; 1. Output and absorption cycles in selected countries; 1A. Business Cycle Stylized Facts for Advanced Economies; 1B. Business Cycle Stylized Facts for Emerging Economies; IV. Methodology; 2. Fiscal stance measures in selected countries; V. Data sources and estimation of output and absorption gaps; VI. Fiscal Policy Behavior during absorption cycles; 2. Correlation between Absorption, Output and Fiscal Aggregates
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (46 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781455260362

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