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Restraining Yourself: Fiscal Rules and Stabilization
Author:
Mr. Barry J. Eichengreen null

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and
Mr. Tamim Bayoumi
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 082
Language:
English
Publication Date:
01 Jul 1994
DOI:
https://doi.org/10.5089/9781451954708.001
ISBN:
9781451954708
ISSN:
1018-5941
Pages:
24
Keywords:
WP; government; State budget; state government; local government; Fiscal stabilization; fiscal restraints; government balance; Govt. deficit; government structure; local government sector; budget balance; state government equation; Fiscal stance; Budget planning and preparation; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund