Fiscal Stabilization in the United States : Lessons for Monetary Unions

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dc.contributor Bank of Finland Nikolov, Plamen Pasimeni, Paolo 2019-09-12T06:31:52Z 2019-09-12T06:31:52Z 2019
dc.description.abstract The debate about the use of fiscal instruments for macroeconomic stabilization has regained prominence in the aftermath of the Great Recession, and the experience of a monetary union equipped with fiscal shock absorbers, such as the United States, has often been a reference. This paper enhances our knowledge about the degree of macroeconomic stabilization achieved in the United States through the federal budget, providing a detailed breakdown of the different channels. In particular, we investigate the relative importance and stabilization impact of the federal system of unemployment benefits and of its extension as a response to the Great Recession. The analysis shows that in the United States, corporate income taxes collected at the federal level are the single-most efficient instrument for providing stabilization, given that even with a smaller size than other instruments they can provide important effects, mainly against common shocks. On the other hand, Social Security benefits and personal income taxes have a greater role in stabilizing asymmetric shocks. A federal system of unemployment insurance, then, can play an important stabilization role, in particular when enhanced by a discretionary program of extended benefits in the event of a large shock, like the Great Recession.
dc.format.extent 26
dc.language.iso ENG
dc.subject rahaliitot
dc.subject Yhdysvallat
dc.subject.other Monetary Union
dc.subject.other Macroeconomic Stabilization
dc.subject.other Fiscal Policy
dc.subject.other Monetary Policy
dc.title Fiscal Stabilization in the United States : Lessons for Monetary Unions
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-201909121461
dc.subject.jel E63
dc.subject.jel F36
dc.subject.jel F41
dc.subject.jel F45 BoF Economics Review
dc.series.year 2019
dc.series.number 6/2019
dc.series.sortingnumber 0006 12.9.2019
dc.subject.yso finanssipolitiikka
dc.subject.yso rahapolitiikka
dc.type.okm D4

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