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NBER Working Papers and Publications
|January 1999||Consumption Smoothing through Fiscal Policy in OECD and EU Countries|
with Bent E. Sgrensen, Oved Yosha
in Fiscal Institutions and Fiscal Performance, James M. Poterba and Jürgen von Hagen, editors
|January 1998||Consumption Smoothing through Fiscal Policy in OECD and EU Countries|
with Bent E. Sorensen, Oved Yosha: w6372
We measure the amount of smoothing achieved through various components of the government deficit in EU and OECD countries. For EU countries, at the 1-year frequency percent of shocks to GDP are smoothed via government consumption, 18 percent via transfers percent via subsidies, while taxes provide no smoothing. The results for OECD countries are similar. Government transfers provide more smoothing of negative than of positive shocks among EU countries. There seems to be no trade-off between high government deficits in a country and the ability to smooth consumption. We find that in countries where there is delegation' of power or where fiscal targets are negotiated effectively by coalition members consumption smoothing via government consumption and government transfers is considerabl...
Published: Fiscal Institutions and Fiscal Performance. Poterba, James M., and Jurgen von Hagen, eds., Chicago: The University of Chicago Press, 1999,pp. 59-80.