-factual simulation. Discretionary fiscal policy supported the effects of automatic stabilizers in the years 2008 and 2009 but then became … much more restrictive. For the Euro zone as a whole, the share of income shocks absorbed by the tax and transfer system … stabilization effect was even negative in some years of the crisis, implying that the tax and transfer system amplified income …

The 'starving the beast' hypothesis claims that tax cuts lead to lower public spending, rather than higher debt levels … order to explore how fiscal policy reacts to exogenous tax revenue shocks. We use panel data from the German states covering … the period from 1992 to 2011, and assess to what extent exogenous changes in tax revenues affect aggregate public …