Why is the fiscal policy often pro-cyclical?
|Author:||Bc. Jan Málek|
|Year:||2011 - summer|
|Leaders:|| PhDr. Jan Zápal Ph.D.
|Work type:|| Bachelors
|Awards and prizes:||B.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.|
|Abstract:||There is large evidence that fiscal policy in many countries tends to pro-cyclicality.
This phenomenon is often observed in emerging countries but might also be present in
developed ones. It is unclear why so many countries follow seemingly sub-optimal fiscal
First part of this thesis reviews existing literature concerning pro-cyclical behavior of
fiscal policy. It shows in which countries and under which circumstances pro-cyclicality has
been present. Furthermore, models explaining pro-cyclicality of fiscal policy are introduced. The remainder of this thesis surveys fiscal policy making in Europe. We show that
after subtraction of automatic stabilizers from government budget and considering only
discretionary part of fiscal policy, pro-cyclicality of fiscal policy is also present.
|Downloadable:|| Bachelor Thesis of Málek Jan