Macro-fiscal volatility and the composition of public spending

0370925 - NHÚ 2012 RIV US eng J - Journal Article
Riscado, S. M. - Stančík, Juraj - Välilä, T.
Macro-fiscal volatility and the composition of public spending.
Fiscal Studies. Roč. 32, č. 4 (2011), s. 511-538. ISSN 0143-5671. E-ISSN 1475-5890
R&D Projects: GA MŠMT LC542
Institutional research plan: CEZ:AV0Z70850503
Keywords : tax volatility * public investment * public consumption
Subject RIV: AH - Economics
Impact factor: 0.486, year: 2011

Earlier empirical literature has examined some long- and medium-term aspects of macro-fiscal volatility while leaving its short-term fiscal impact unexplored. To help fill that gap, we examine the impact of macro-fiscal volatility on the composition of public spending. To that end, we analyse a panel of 10 EU countries during 1991–2007. Our results suggest that increases in the volatility of regularly-collected and cyclical revenues such as the VAT and income taxes tend to tilt the expenditure composition in favour of public investment. In contrast, increases in the volatility of ad hoc taxes such as capital taxes tend to favour public consumption spending, albeit only a little.
Permanent Link: http://hdl.handle.net/11104/0204598