Using data from 29 European countries over 2002Q1-2019Q4, we estimate automatic stabilizers using various techniques, and show that the use of simple measures of government size as proxies is based on assumptions that are unrealistic and potentially misleading. Relaxing these assumptions allows...

Is the potency of fiscal policy lower for more open economies, as suggested by economic theory? Using annual data from the period 1951–2007, for 62 developed and developing economies, the paper’s empirical findings show that the effectiveness of fiscal policy is indeed reduced by an...