Series: IMF Working Papers
Author(s): Michael Kumhof , and Douglas Laxton
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 April 2009
Keywords: Fiscal policy rules, balanced budget rules, countercyclical fiscal policy, welfare analysis, tax revenue, fiscal instruments, inflation,
This paper analyzes the scope for systematic rules-based fiscal activism in open economies. Relative to a balanced budget rule, automatic stabilizers significantly improve welfare. But they minimize fiscal instrume...