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Abstract
The macroeconomic literature on automatic stabilization tends to focus on taxes and dismiss the relevance of government expenditure except for unemployment compensation. Our results go sharply contrary to this view. We engage in an empirical analysis of 21 OECD countries from 1982 to 2003 and find that age and health-related social expenditure as well as incapacity and sick benefits all react to the cycle in a stabilizing manner. While possibly new in the macro literature, this conforms to many results in studies in labour economics. The policy implications are broad since much previous analysis of discretionary fiscal policy rests on official figures for automatic stabilization. There are also major implications for efforts to incorporate automatic fiscal policy in simulation models.
Original language | English |
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Pages (from-to) | 715-756 |
Number of pages | 42 |
Journal | Oxford Review of Economic Policy |
Volume | 23 |
Issue number | 56 |
DOIs | |
Publication status | Published - Oct 2008 |
Keywords
- social spending
- economic stabilisers
- oecd
- economic development
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Dive into the research topics of 'Social spending and automatic stabilizers in the OECD'. Together they form a unique fingerprint.Activities
- 2 Participation in conference
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Economic Policy Panel Meeting, April 2008
Darby, J. (Invited speaker)
Apr 2008Activity: Participating in or Organising an Event › Participation in conference
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Royal Economics Society Conference, March 2008
Darby, J. (Speaker)
17 Mar 2008Activity: Participating in or Organising an Event › Participation in conference