Fiscal Stabilization in the United States : Lessons for Monetary Unions

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dc.contributor Bank of Finland
dc.contributor.author Nikolov, Plamen
dc.contributor.author Pasimeni, Paolo
dc.date.accessioned 2019-09-12T06:31:52Z
dc.date.available 2019-09-12T06:31:52Z
dc.date.issued 2019
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/16332
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.rights https://helda.helsinki.fi/bof/copyright
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
dc.series.name BoF Economics Review
dc.series.year 2019
dc.series.number 6/2019
dc.series.sortingnumber 0006
dc.date.publication 12.9.2019
dc.subject.yso finanssipolitiikka
dc.subject.yso rahapolitiikka
dc.type.okm D4

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