Fiscal Stabilization Policy and Fiscal Institutions.

Journal article

In this paper we analyse counter-cyclical fiscal policy within the context of a microfounded analysis of business-cycle stabilization. We show that tax and spending instruments can have a useful counter-cyclical role, even after allowing for the distortionary nature of the instruments and the need for debt sustainability. A critical barrier to the use of fiscal instruments may be political economy concerns, and we survey recent suggestions involving alternative fiscal policy institutions.

Authors: Leith, C; Wren-Lewis, S

• Journal: Oxford Review of Economic Policy
• Volume: 21
• Publication date: 2005-01-01
• ISSN: 0266-903X
• Language: English