Why Is Fiscal Policy Often Procyclical?
Access StatusFull text of the requested work is not available in DASH at this time ("dark deposit"). For more information on dark deposits, see our FAQ.
MetadataShow full item record
CitationAlesina, Alberto, Filipe R. Campante, and Guido Tabellini. 2008. “Why Is Fiscal Policy Often Procyclical?” Journal of the European Economic Association 6 (5) (September): 1006–1036. doi:10.1162/jeea.2008.6.5.1006.
AbstractFiscal policy is procyclical in many developing countries. We explain this policy failure with a political agency problem. Procyclicality is driven by voters who seek to “starve the Leviathan” to reduce political rents. Voters observe the state of the economy but not the rents appropriated by corrupt governments. When they observe a boom, voters optimally demand more public goods or lower taxes, and this induces a procyclical bias in fiscal policy. The empirical evidence is consistent with this explanation: Procyclicality of fiscal policy is more pronounced in more corrupt democracies.
Citable link to this pagehttp://nrs.harvard.edu/urn-3:HUL.InstRepos:34729976
- FAS Scholarly Articles