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Government Size and Business Cycle Volatility: How Important are Credit Constraints?
- Source :
- Economica; Apr2015, Vol. 82 Issue 326, p201-221, 21p
- Publication Year :
- 2015
-
Abstract
- In this paper we analyse how the availability of credit influences the relationship between government size as a proxy for fiscal stabilization policy and the amplitude of business cycle fluctuations in a sample of advanced OECD countries. Interpreting relatively low loan-to-value ratios as an indication of tight credit constraints, we find that government size exerts a stabilizing effect on output and consumption growth fluctuations only when credit constraints are relatively tight. Our results provide support for the hypothesis that credit market frictions play a crucial role in the transmission of fiscal policy. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00130427
- Volume :
- 82
- Issue :
- 326
- Database :
- Complementary Index
- Journal :
- Economica
- Publication Type :
- Academic Journal
- Accession number :
- 101364008
- Full Text :
- https://doi.org/10.1111/ecca.12103