Fiscal Transparency and Procyclical Fiscal Policy
Publikation: Working paper › Forskning
Dokumenter
- Wp-10-01
Forlagets udgivne version, 555 KB, PDF-dokument
This paper examines why fiscal policy is procyclical in developing as well as developed countries. We introduce the concept of fiscal transparency into a model of retrospective voting, in which a political agency problem between voters and politicians generates a procyclical bias in government spending. The introduction of fiscal transparency generates two new predictions: 1) the procyclical bias in fiscal policy arises only in good times; and 2) a higher degree of fiscal transparency reduces the bias in good times. We find solid empirical support for both predictions using data on both OECD countries and a broader set of countries.
Originalsprog | Engelsk |
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Udgiver | Department of Economics, University of Copenhagen |
Antal sider | 36 |
Status | Udgivet - 2010 |
Bibliografisk note
JEL Classification: D72, E32, E62
- Det Samfundsvidenskabelige Fakultet - politisk økonomi
Forskningsområder
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