This paper proposes an asymmetric model within which consumer credit facilitates both consumption smoothing and rational habit modification. The model provides a better description of aggregate time series consumption data than competeting models. In particular, the model can account for the...

This paper investigates the relationship between output volatility and growth using post-war real GDP data for the United States. We expand on recent research by Beaudry and Koop (1993) documenting the asymmetric effect of recessions on output growth. The results presented in this paper suggest...

This paper tests a version of Barro's tax-smoothing model, which assumes intertemporal optimization by a government seeking to minimize the distortionary costs of taxation, using Pakistan and Sri Lankan data for the periods 1956-95 and 1964-97, respectively. The empirical results indicate that...

India has a long history of running fiscal deficits. This paper asks whether the magnitude of these deficits has involved a violation of India's intertemporal budget constraint. Times series evidence on Central government tax revenues and expenditures are examined for cointegration using...

The Friedman-Ball hypothesis implies a link between the inflation rate and inflation uncertainty. In this paper we employ a new test for the joint null hypothesis of no dependence effects and no asymmetry in the G7 inflation volatility. The results show that higher inflation rates operate...

Evidence suggests that short-term interest rate volatility peaks with the level of short rates, while equity volatility responds asymmetrically to positive and negative shocks. We present an LM based test that distinguishes between level effects and asymmetry in volatility which is robust to the...

This paper presents a test of Wagner's Law for the OECD countries using data from 1960 to 1995. Unlike other analyses of Wagner's Law, explicit allowance is made in the paper for the effect of changes in the age distribution of the population on public spending. The results show that the...

We use a model of intertemporal tax smoothing to examine long run data on fiscal policy in the United States, the United Kingdom, and Australia. We find that the intertemporal model provides a good description of tax policy for the United States but is rejected for Australia and for the UK.

This article presents new evidence on the ability of Peacock and Wiseman's displacement hypothesis to explain temporal increases in the ratio of government expenditure to Gross Domestic Product (GDP) in the UK. Using univariate modelling techniques that are robust to structural changes in the...