The social impact of fiscal policy responses to crises

Carlos A. Vegh , Guillermo Vuletin, 12 June 2014

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Fiscal policy in many developing countries is typically procyclical. Expansionary in good times and contractionary in bad times, these policies often amplify business cycles.

Topics: Macroeconomic policy
Tags: austerity, business cycle, cyclicality, fiscal policy, LAC-7

Tax-policy procyclicality

Carlos A. Vegh , Guillermo Vuletin, 1 October 2013

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It is well-established that government spending in developing countries has often been procyclical. In other words, government spending has increased in good times and contracted in bad times, thus exacerbating the underlying business cycle. The inability to save in good times to build a war chest for bad times has often led to wrenching financial and sovereign-debt crises.

Topics: Macroeconomic policy, Taxation
Tags: austerity, business cycles, cyclicality, developing countries, fiscal policy, tax

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