Vegh, C. A. & Vultein, G. (2014) “The social impact of fiscal policy responses to crises“, VoxEU Organisation, 12 Ιουνίου.
The question of whether fiscal policy should be pro- or countercyclical has become increasingly relevant during the recession. This column provides causal evidence from South American countries showing the success of countercyclical policy in improving social indicators of economic success, combined with correlative evidence from Europe. This represents a strike against the case for austerity-led growth.
Fiscal policy in many developing countries is typically procyclical. Expansionary in good times and contractionary in bad times, these policies often amplify business cycles. The most convincing explanations for such practices seem to be limited access to international credit markets during bad times and political pressures that tend to encourage too much public spending during boom periods (Calderon and Schmidt-Hebbel 2008). Whatever the reason, the pattern is well documented (see Frankel, Vegh, and Vuletin 2011 on the spending side and Vegh and Vuletin 2013a on the tax side). In particular, contractionary fiscal policy in bad times seems to have increased the severity and duration of crises (Vegh and Vuletin 2013b).
Σχετικές αναρτήσεις:
- Van Hooren, F., Kaasch, A. & Starke, P. (2014) “The shock routine: economic crisis and the nature of social policy responses“, Journal of European Public Policy, Vol. 21 Issue 4, Taylor and Francis Online, 21 Μαρτίου.
- Darvas, Z. & Wolff, B. G. (2014) “Europe’s social problem and its implications for economic growth“, Bruegel Policy Brief, 01 Απριλίου.
- Koutsogeorgopoulou, V., Matsaganis, M., Leventi, Schneider, J. D., (2013) “Fairly Sharing the Social Impact of the Crisis in Greece“, OECD, Paris.