This paper analyses the reaction of fiscal policy to the cycle in OECD countries. The results suggest that while overall government balances were counter-cyclical in the past and more so in economic downturns than in upswings, discretionary fiscal policy was neutral on average. However,...

The international financial linkage block of the OECD Secretariat's multi-country model, INTERLINK, is based on a portfolio balance model of exchange rate determination. International consistency is ensured by cross country restrictions on parameters imposed during estimation (1). However, in an...