Economic Policy and Output Volatility in Spain, 1950-1998: Was Fiscal Policy Destabilizing?
- Autores: Stefano Battilossi, Regina Escario Latas, James Foreman-Peck
- Localización: XVIII Encuentro de economía pública, 2011
- Idioma: español
- Enlaces
-
Resumen
Was Spanish fiscal policy destabilising? How did the political transition from autocracy to democracy affect its impact on real output growth? Fiscal policy can be decomposed into three elements: automatic stabilizers, systematic responses to changes in the state of the economy, and discretionary policy shocks. We estimate policy reaction functions and test the impact of fiscal shocks on growth volatility over the period 1950-1998. We find that a transition from pro-cyclical to countercyclical fiscal policy occurred in the late years of the Franco�s regime, contributing to the stabilization of the growth pattern.
The timing of the shift, between the late 1960s and early 1970s, was not determined by policy changes, but rather by gradual pressure from economic liberalization, the external constraint imposed by a fixed exchange rate regime and the modernization of fiscal policy instruments. The aggressiveness of fiscal shocks also decreased over time, thus contributing to the progressive stabilization of output growth.
