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Business Cycles and Macroeconomic Stability

Should We Rebuild Built-in Stabilizers?

  • Jean-Oliver Hairault
  • Pierre-Yves Hénin
  • Franck Portier

Table of contents

  1. Front Matter
    Pages i-xxv
  2. Fiscal Policies, Business Cycle and Growth

    1. Front Matter
      Pages 1-1
    2. Jim Dolmas, Gregory W. Huffman
      Pages 3-29
    3. Steve Ambler, Emanuela Cardia
      Pages 31-53
    4. Fabrice Collard
      Pages 79-105
  3. Automatic Stabilizers in an Economic Union

    1. Front Matter
      Pages 107-107
    2. Kenneth M. Kletzer, Willem H. Buiter
      Pages 109-147
    3. Tamim Bayoumi, Paul R. Masson
      Pages 149-170
    4. Jürgen von Hagen, George W. Hammond
      Pages 171-188
    5. Frédérique Bec, Jean-Olivier Hairault
      Pages 189-208
  4. Stabilization and Labour Market Policies

    1. Front Matter
      Pages 209-209
    2. Stephen P. Millard
      Pages 211-230
    3. Jean-Olivier Hairault, François Langot, Franck Portier
      Pages 231-251
  5. Empirical Evidence, Recent Trends and Problems on Stabilization

    1. Front Matter
      Pages 253-253
    2. Jean-Philippe Cotis, Bruno Crepon, Yannick L’Horty, Renaud Méary
      Pages 255-280
    3. Bertrand Candelon, Pierre-Yves Hénin
      Pages 281-300
    4. Ali H. Bayar, André Dramais, Werner Roeger, Jan In’t Veld
      Pages 321-336
  6. Back Matter
    Pages 337-341

About this book

Introduction

Setting the issue "Most economists consider the marked increase in automatic stabilizers a highly favorable development with respect to maintenance of economic stability". Besides the rare privilege of having being signed by both Milton Friedman and Paul Samuelson (Depres,Friedman, Hart, Samuelson, and Wallace [1950]), among others, this sentence expressed as soon as 1950 the consensus view on the stabilizing effect of fiscal rules governing tax revenue and public expendi­ tures and transfers. This positive ex ante assessment will have been confirmed ex post as part of the explanation for post war stabilization (Burns [1960], de Long and Summers [1986], Moore and Zarnovitz [1986]). However, it becomes disputed in both its positive and normative aspects. Many institutional changes since the eighties point at curbing back the transfer mechanisms underlying automatic stabilizers, and legal restraints on deficits such as the US balanced budget amendment or the European Maastricht criteria would involve serious risks for the future of stabilizers. Under such rules "the government would become, almost inevitally, a destabilizer rather than a stabilizer" said Joseph Stiglitz, quoted by the New York Times (April 1995)). "Built-in stabilizers are automatic fiscal adjustments that reduce the national income multiplier and thus cushion the effects of changes in autonomous spend­ ing on the level of income" (Pechman [1987]). Early analyses of the automatic fiscal stabilizers include the contributions of A. G. Hart [1945], R. Musgrave and M. Miller (1948) and E. C. Brown (1955).

Keywords

fiscal policy growth labor market macroeconomics monetary policy monetary union unemployment

Editors and affiliations

  • Jean-Oliver Hairault
    • 1
    • 2
  • Pierre-Yves Hénin
    • 2
    • 3
  • Franck Portier
    • 4
    • 2
  1. 1.CEPE-Université de Lille IFrance
  2. 2.MAD-Université de Paris IFrance
  3. 3.CEPREMAPFrance
  4. 4.Université de Rouen, CEPREMAPFrance

Bibliographic information