Cover IMF Staff Position Notes
Automatic Fiscal Stabilizers
Author:
Mr. Steven A. Symansky
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Mr. Thomas Baunsgaard
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Series:
IMF Staff Position Notes
Volume/Issue:
Volume 2009: Issue 023
Language:
English
Publication Date:
28 Sep 2009
DOI:
https://doi.org/10.5089/9781455290567.004
ISBN:
9781455290567
ISSN:
2617-6742
Pages:
26
Keywords:
SPN; automatic stabilizer; tax; income tax; country; rate schedule; social security contribution rate; transfer program; expenditure rule; policy package; IMF government finance Statistics; fiscal policy response; Automatic stabilizers; Personal income tax; Unemployment benefits; Social security contributions; Africa
Legal-disclaimer:
The views expressed herein are those of the author(s) and should not be attributed to the IMF, its Executive Board, or its management.
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This paper discusses how to enhance automatic stabilizers without increasing the size of government. We distinguish between permanent changes in the parameters of the tax and expenditure system (e.g., changes in tax progressivity) that will enhance the traditional automatic stabilizer, and temporary changes triggered by certain economic developments (e.g., tax measures targeted at credit and liquidity constrained households, triggered during a severe downturn). We argue that, with some exceptions, the latter are preferable as they can be implemented with lower disruptions in other fiscal policy goals (e.g., economic efficiency). Moreover, countries should also avoid introducing procyclicality as a result of fiscal rules, as these would offset the effect of existing automatic stabilizers.
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Cover IMF Staff Position Notes
IMF Staff Position Notes
ISSN:
2617-6742
Publisher:
International Monetary Fund
Volume 2009: Issue 023