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In this paper, a simple methodology to assess the effectiveness of automatic stabilizers is proposed and empirically tested using French data for the period 1970-2000. The paper concludes that fiscal stabilizers have dampened output variability by approximately 35 45 percent depending on the measure of potential output used. In addition, the results indicate that fiscal stabilizers mainly operated through the reduction of private investment fluctuations from 1970 to 1985, and through the reduction of private consumption variability thereafter. Due to the counterfactual nature of the analysis performed, the simplicity of the theoretical model, and simultaneity issues that might introduce biases, the results can at most be interpreted as approximations of the phenomenon that is analyzed.

Budgeting --- Investments: General --- Macroeconomics --- Fiscal Policy --- Business Fluctuations --- Cycles --- Macroeconomics: Consumption --- Saving --- Wealth --- National Budget --- Budget Systems --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Personal Income, Wealth, and Their Distributions --- Investment --- Capital --- Intangible Capital --- Capacity --- Budgeting & financial management --- Private consumption --- General government spending --- Automatic stabilizers --- Disposable income --- Private investment --- National accounts --- Public financial management (PFM) --- Fiscal policy --- Consumption --- Economics --- Budget --- National income --- Saving and investment --- France

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In many countries the decentralization of spending responsibilities has outpaced the decentralization of revenue powers. Sub-national governments have then to rely on transfers from the center and borrowing to finance their spending. When this occurs, we find that the overall fiscal deficit tends to increase. This result is based on cross-country econometric evidence from OECD countries, and is particularly strong in the presence of regional disparities. Fiscal discipline can be strengthened by ensuring that sub-national taxing powers are adequate to meet spending obligations.

Expenditures, Public --- Fiscal policy --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Appropriations and expenditures --- Government appropriations --- Government expenditures --- Government spending --- Public expenditures --- Public spending --- Spending, Government --- Public administration --- Government spending policy --- Econometric models. --- Government policy --- Budgeting --- Macroeconomics --- Public Finance --- Structure, Scope, and Performance of Government --- National Deficit Surplus --- State and Local Government --- Intergovernmental Relations: General --- State and Local Taxation, Subsidies, and Revenue --- State and Local Budget and Expenditures --- Intergovernmental Relations --- Federalism --- Secession --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- National Budget --- Budget Systems --- Debt --- Debt Management --- Sovereign Debt --- Public finance & taxation --- Budgeting & financial management --- Fiscal stance --- Expenditure --- General government spending --- Public debt --- Public financial management (PFM) --- Budget --- Debts, Public --- Australia

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The purpose of this paper is to assess whether expenditure decentralization has contributed to weakening fiscal performance in Europe. Using a panel of EU15 countries for the period 1995-2011, we estimate three econometric models and ask the following questions: (1) does the form of spending decentralization affect the general government fiscal balance?; (2) is there evidence of spending duplication?; and (3) are soft budget constraints prevalent at the subnational level in Europe? Our results indicate that current decentralization models may have some shortcomings and efforts to achieve fiscal consolidation would require improvements in three areas: better matching subnational spending and revenues; reshaping some expenditure assignments to reduce overlap; and improving the effectiveness of institutional arrangements at the subnational level.

Budget --- Decentralization in government --- Fiscal policy --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Budgeting --- Expenditures, Public --- Government policy --- Forecasting --- International Monetary Fund. --- Internationaal monetair fonds --- International monetary fund --- Government spending policy --- Public spending policy --- Spending policy, Government --- Full employment policies --- Unfunded mandates --- E-books --- Macroeconomics --- Public Finance --- Structure, Scope, and Performance of Government --- National Deficit Surplus --- State and Local Government --- Intergovernmental Relations: General --- State and Local Budget and Expenditures --- Intergovernmental Relations --- Federalism --- Secession --- National Government Expenditures and Related Policies: General --- Fiscal Policy --- National Budget --- Budget Systems --- Public finance & taxation --- Budgeting & financial management --- Expenditure --- Fiscal federalism --- General government spending --- Fiscal stance --- Fiscal rules --- Public financial management (PFM) --- Ireland