Automatic Fiscal Stabilizers in France

37 Pages Posted: 6 Feb 2006

Date Written: November 2002

Abstract

In this paper, a simple methodology to assess the effectiveness of automatic stabilizers is proposed and empirically tested using French data for the period 1970-2000. The paper concludes that fiscal stabilizers have dampened output variability by approximately 35-45 percent depending on the measure of potential output used. In addition, the results indicate that fiscal stabilizers mainly operated through the reduction of private investment fluctuations from 1970 to 1985, and through the reduction of private consumption variability thereafter. Due to the counterfactual nature of the analysis performed, the simplicity of the theoretical model, and simultaneity issues that might introduce biases, the results can at most be interpreted as approximations of the phenomenon that is analyzed.

Keywords: Automatic stabilizers, fiscal policy, France

JEL Classification: E62, E32

Suggested Citation

Di Bella, C. Gabriel, Automatic Fiscal Stabilizers in France (November 2002). IMF Working Paper No. 02/199, Available at SSRN: https://ssrn.com/abstract=880331

C. Gabriel Di Bella (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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