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Business cycles and fiscal policy: Norway 1973-93

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Abstract

Effects of fiscal policy on macroeconomic variables during 1973-93 are analysed using a disaggregated macroeconometric model of the Norwegian economy. Fiscal policy is measured as deviations from estimated trends for disaggregated policy variables. The policy effects are related to the cyclical situation of the economy. Variations in fiscal policy instruments have reduced output volatility during 1973-93 by approximately 10 per cent, according to our results. On average the behaviour of local government has been procyclical. Partial effects of various fiscal instruments are calculated. During certain episodes fiscal policy appeared procyclical, an effect that is due to the aim of stabilizing the current account.

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  • Einar Bowitz & Stein Inge Hove, 1996. "Business cycles and fiscal policy: Norway 1973-93," Discussion Papers 178, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:178
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    References listed on IDEAS

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    1. Audun Langørgen, 1994. "A Macromodel of Local Government Spending Behaviour in Norway," Discussion Papers 117, Statistics Norway, Research Department.
    2. Ben Lockwood & Alan Manning, 1993. "Wage Setting and the Tax System: theory and Evidence for the UK," CEP Discussion Papers dp0115, Centre for Economic Performance, LSE.
    3. Franz, Wolfgang, 1990. "Fiscal Policy in the Federal Republic of Germany," Empirical Economics, Springer, vol. 15(1), pages 17-54.
    4. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, vol. 52(1), pages 1-29, August.
    5. Jan Fagerberg & Ådne Cappelen & Lars Mjöset, 1992. "Structural change and economic policy: the Norwegian model under pressure," Working Papers Archives 1992456, Centre for Technology, Innovation and Culture, University of Oslo.
    6. Ray C. Fair, 1988. "Sources of Economic Fluctuations in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 313-332.
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    More about this item

    Keywords

    Business cycles; Fiscal policy; Macroeconometric modelling.;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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