Title: GOVERNMENT SIZE AND MACROECONOMIC STABILITY ——Evidence from Emerging Markets and Analysis of RBC
Abstract: This paper studies the influence of government spending and revenue scale on the macroeconomic stability.Empirical evidence about emerging markets shows that the size of government consumption has a destabilizing impact on the output volatility,while the relationship between general government expenditure size and output volatility is not clear.The real business cycle model is constructed which contains a progressive type of taxes system and government spending disturbance.The model fits the destabilizing effect of government spending size as well as stabilizing effect of tax system.If government spending is regarded as productive expenditure,the stabilizing effect of government spending size will take up,although the stabilizing effect will disappears if government spending size expands further.
Publication Year: 2014
Publication Date: 2014-01-01
Language: en
Type: article
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