Working Paper: NBER ID: w16346
Authors: Agustín S. Béntrix; Philip R. Lane
Abstract: We examine the cross-country dispersion in fiscal outcomes during 2007-2009. In principle, international differences in fiscal policy may be related to differences in optimal fiscal positions, funding constraints, political economy factors and fiscal control problems. We find that the decline in the overall and structural fiscal balances have been larger for those countries experiencing larger increases in unemployment and where credit growth during the pre-crisis period was more rapid. However, there is no systematic co-variation between fiscal outcomes and a larger number of other macroeconomic variables and country characteristics.
Keywords: Fiscal Policy; Global Crisis; Cross-Country Analysis
JEL Codes: E60; F41; H60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rising unemployment (J64) | decline in overall and structural fiscal balances (H69) |
| more rapid credit growth in the pre-crisis period (F65) | decline in overall and structural fiscal balances (H69) |
| political systems with more checks and balances (D72) | smaller decline in fiscal balance (H69) |
| decline in overall and structural fiscal balances (H69) | fiscal health (H68) |