Fatás, Antonio; Mihov, Ilian - C.E.P.R. Discussion Papers - 2004
Fiscal policy restrictions are often criticized for limiting the ability of governments to react to business cycle … volatility. In this Paper we use data from 48 US states to investigate how budget rules affect fiscal policy outcomes. Our key … policy); and (2) fiscal restrictions reduce the responsiveness of fiscal policy to output shocks and decrease the persistence …