NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Adriana Arreaza

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NBER Working Papers and Publications

January 1999Consumption 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 J├╝rgen von Hagen, editors
January 1998Consumption 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...

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