Fiscal Policy and Stability (Debrun and Kapoor)

Fiscal policy and macroeconomic stability: automatic stabilizers work, always and everywhere by Xavier Debrun and Radhicka Kapoor published by IMF. The paper revisits the link between fiscal policy and macroeconomic stability. The results provide strong support for the view that fiscal stabilization operates mainly through automatic stabilizers. Also, the destabilizing impact of policy changes not systematically related to the business cycle may not be as robust as suggested in the literature. see: http://www.imf.org/external/pubs/ft/wp/2010/wp10111.pdf