Navigation path

What is the impact of tax and welfare reforms on fiscal stabilisers? A simple model and an application to EMU - Marco Buti (Directorate General for Economic and Financial Affairs) and Paul Van

Author(s): Marco Buti (Directorate General for Economic and Financial Affairs) and Paul Van den Noord (OECD)

What is the impact of tax and welfare reforms on fiscal stabilisers? A simple model and an application to EMU - Marco Buti (Directorate General for Economic and Financial Affairs) and Paul Van den Noordpdf(433 kB) Choose translations of the previous link 

Reforms aiming at lowering the tax burden and cutting social benefits may boost efficiency and output, and improve market adjustment to shocks, but, by reducing the size of automatic stabilisers, may also imply less cyclical smoothing. This would be problematic in EMU given the loss of national monetary autonomy. This paper argues that the alleged trade-off between efficiency/flexibility and stabilisation depends on the typology of shocks affecting the economy.

(European Economy. Economic Papers 187. July 2003. Brussels. 28pp. Tab. Free.)

KC-AI-03-008-EN-C (online)
ISBN 92-894-5835-6 (online)
ISSN 1016-8060 (online)

Additional tools

  • Print version 
  • Decrease text 
  • Increase text