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On The Cyclical Bias In Government Spending

Author

Listed:
  • Zvi Hercowitz

    (Tel Aviv University, Bank of Israel)

  • Michel Strawczynski

    (Bank of Israel)

Abstract

First, this paper reports ifndings that the prolonged rise in the spending/output ratio in OECD countries is related to a cyclical bias: countercyclical spending in contractions and procyclical spending in expansions. Then, atfer brielfy discussing the policy implications of the cyclical bias, the paper adresses the recent experience of Israel under the Budget Deficit Reduction Law.

Suggested Citation

  • Zvi Hercowitz & Michel Strawczynski, 1998. "On The Cyclical Bias In Government Spending," Bank of Israel Working Papers 1998.06, Bank of Israel.
    • Handle: RePEc:boi:wpaper:1998.06
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    File URL: https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_1998.06.pdf
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    References listed on IDEAS

    as
    1. Mark Hallerberg & Jürgen von Hagen, 1999. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 209-232, National Bureau of Economic Research, Inc.
    2. de Haan, Jakob & Sturm, Jan-Egbert, 1994. "Political and Institutional Determinants of Fiscal Policy in the European Community," Public Choice, Springer, vol. 80(1-2), pages 157-172, July.
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    6. Giancarlo Corsetti & Nouriel Roubini, 1997. "Politically Motivated Fiscal Deficits: Policy Issues in Closed and Open Economies," Economics and Politics, Wiley Blackwell, vol. 9(1), pages 27-54, March.
    7. Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72, National Bureau of Economic Research, Inc.
    8. Edin, Per-Anders & Ohlsson, Henry, 1991. "Political determinants of budget deficits: Coalition effects versus minority effects," European Economic Review, Elsevier, vol. 35(8), pages 1597-1603, December.
    9. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    10. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August.
    11. Finn E. Kydland (ed.), 1995. "Business Cycle Theory," Books, Edward Elgar Publishing, number 565.
    12. International Monetary Fund, 1996. "Budget Processes and Commitment to Fiscal Discipline," IMF Working Papers 1996/078, International Monetary Fund.
    13. Hallerberg, Mark & von Hagen, Jürgen, 1997. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits within the European Union," CEPR Discussion Papers 1555, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Ernesto Talvi & Carlos A. Vegh, 2000. "Tax Base Variability and Procyclical Fiscal Policy," NBER Working Papers 7499, National Bureau of Economic Research, Inc.
    2. Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.

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