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Stochastic fiscal policy and the Swedish business cycle

Jonsson, Gunnar and Klein, Paul (1996) Stochastic fiscal policy and the Swedish business cycle Journal of Monetary Economics, 38, (2), pp. 245-268. (doi:10.1016/S0304-3932(96)01284-6).

Record type: Article


In this paper we show that fluctuations in distortive taxes can account for some of the key features of the Swedish post-war business cycle. The empirical fit of a simple stochastic growth model is significantly improved when it is amended to include imperfectly predictable fluctuations in payroll taxes, consumption taxes, and government consumption. Indeed, using the simulated method of moments, SMM, we find that, for large sets of conventional moments, models with stochastic fiscal policy cannot be statistically rejected, whereas a model without it is always rejected.

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Published date: October 1996
Keywords: business cycles, stochastic growth model, fiscal policy, simulated method of moments


Local EPrints ID: 188423
ISSN: 0304-3932
PURE UUID: 003c023a-27be-4644-8e23-62782f4afaa4

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Date deposited: 03 Jun 2011 12:46
Last modified: 18 Jul 2017 11:42

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Author: Gunnar Jonsson
Author: Paul Klein

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