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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/3786

Title: How to make discretionary fiscal policy countercyclical
Authors: Leão, Pedro
Keywords: Stabilization
Discretionary fiscal policy
Business cycle
Issue Date: 2012
Publisher: ISEG - Departamento de Economia
Citation: Leão, Pedro. 2012. "How to make discretionary fiscal policy countercyclical". Instituto Superior de Economia e Gestão - DE working papers nº2/2012/DE/UECE
Series/Report no.: DE working papers;2/2012/DE/UECE
Abstract: In most countries, discretionary fiscal policy has often been pro-cyclical: instead of dampening the business cycle, actual discretionary policy has mostly magnified it. This paper proposes a mechanism that allows discretionary fiscal policy to be counter-cyclical. This involves the creation of a Budget Agency which carries out expenditures that, in addition to increasing its debt, also raise its saleable assets - and, therefore, do not reduce the net value of its balance-sheet. One example is the construction, during a downswing, of housing and office buildings that will be sold in the subsequent upswing. Besides real estate investment, the Budget Agency may also undertake “balance-sheet neutral” expenditures in two other sectors responsible for the bulk of business cycle fluctuations: business investment and durable consumption.
URI: http://hdl.handle.net/10400.5/3786
ISSN: 0874-4548
Publisher version: https://aquila.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=245083&contentContextPath_PATH=/departamentos/ec/lateral/menu-working-papers/nova-serie/2012&_request_checksum_=5108da887ce3372c048428249864b82ecbacb801
Appears in Collections:UECE - Documentos de Trabalho / UECE - Working Papers
UECE - Documentos de Trabalho / UECE - Working Papers
DE - Documentos de trabalho / Working Papers

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