Recognizing the Bias : Financial Cycles and Fiscal Policy /
This paper argues that asset price cycles have significant effects on fiscal outcomes. In particular, there is evidence of debt bias-the tendency of debt to increase over the cycle- that is significantly larger for house price cycles than stand-alone business cycles. Automatic stabilizers and discre...
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| Other Authors: | , , |
| Format: | Journal |
| Language: | English |
| Published: |
Washington, D.C. :
International Monetary Fund,
2015.
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| Series: | IMF Working Papers; Working Paper ;
No. 2015/246 |
| Online Access: | Full text available on IMF |
| Summary: | This paper argues that asset price cycles have significant effects on fiscal outcomes. In particular, there is evidence of debt bias-the tendency of debt to increase over the cycle- that is significantly larger for house price cycles than stand-alone business cycles. Automatic stabilizers and discretionary fiscal policy generally respond to output fluctuations, whereas revenue increases due to house price booms are largely treated as permanent. Thus, neglecting the direct and indirect impact of asset prices on fiscal accounts encourages procyclical fiscal policies. |
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| Item Description: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Physical Description: | 1 online resource (30 pages) |
| Format: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Access: | Electronic access restricted to authorized BRAC University faculty, staff and students |