Why is fiscal policy often procyclical?
By: Alberto Alesina, Guido Tabellini.
Contributors: Tabellini, Guido Enrico, 1956-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11600; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11600.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Fiscal policy.; Fiscal policy -- Developing countries.; Business cycles.; Business cycles -- Developing countries.
Description: "Many countries, especially developing ones, follow procyclical fiscal polices, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions.  We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for less-than-benevolent government to appropriate rents.  Voters have incentives similar to the "starving the Leviathan" classic argument, and demand more public goods or fewer taxes to prevent governments from appropriating rents when the economy is doing well.  We test this argument against more traditional explanations based purely on borrowing constraints, with a reasonable amount of success"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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