De facto fiscal space and fiscal stimulus
Subtitle: definition and assessment
By: Joshua Aizenman, Yothin Jinjarak
Contributors: Yothin Jinjarak; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16539; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16539.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] :
Description: "We define the notion of de facto fiscal space' of a country as the inverse of the outstanding public debt relative to the de facto tax base, where the latter measures the realized tax collection, averaged across several years to smooth for business cycle fluctuations.  We apply this concept to account for the cross-country variation in the fiscal stimulus associated with the global crisis of 2009-2010.  We find that greater de facto fiscal space prior to the global crisis, higher GDP/capita, and higher financial exposure to the US, were associated with a higher fiscal stimulus/GDP during 2009-2010.  Intriguingly, higher trade openness has been associated with lower fiscal stimulus"--National Bureau of Economic Research web site.
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