Fiscal Stabilisation Policy and Fiscal Institutions

World Economy & Finance Research Programme Working Paper No. 0007

24 Pages Posted: 1 Nov 2006

See all articles by Campbell Leith

Campbell Leith

University of Glasgow - Department of Economics

Simon Wren-Lewis

University of Oxford - Economics Department

Date Written: March 2006

Abstract

In this paper we analyse countercyclical fiscal policy within the context of a microfounded analysis of business cycle stabilisation. 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.

Suggested Citation

Leith, Campbell and Wren-Lewis, Simon J.Q., Fiscal Stabilisation Policy and Fiscal Institutions (March 2006). World Economy & Finance Research Programme Working Paper No. 0007, Available at SSRN: https://ssrn.com/abstract=941157 or http://dx.doi.org/10.2139/ssrn.941157

Campbell Leith (Contact Author)

University of Glasgow - Department of Economics ( email )

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Simon J.Q. Wren-Lewis

University of Oxford - Economics Department ( email )

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Oxford, OX1 3BJ
United Kingdom

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