Automatic Stabilizers and Economic Crisis: US vs. Europe
By Mathias Dolls, Clemens Fuest, Andreas Peichl. Social Science Research Network, 2012
339 citations recorded by the source corpus.
This paper analyzes the effectiveness of the tax and transfer systems in the EU and the US to provide income insurance through automatic stabilization in the recent economic crisis. We find that automatic stabilizers absorb 38% of a proportional income shock in the EU, compared to 32% in the US. In the case of an unemployment shock 47% of the shock is absorbed in the EU, compared to 34% in the US. This cushioning of disposable income leads to a demand stabilization of up to 30% in the EU and up to 20% in the US. There is large heterogeneity within the EU. Automatic stabilizers in Eastern and Southern Europe are much lower than in Central and Northern European countries. We also investigate whether countries with weak automatic stabilizers have enacted larger fiscal stimulus programs.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/866b2aa03e4e6c358ba9778ad58bee61546b9342
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In Accounting
In Economics and Econometrics
- Konstantinos Tatsiramos
- Martin Larch
- Marieke Vandeweyer
- J. van Ours
- J. Veld
- M. Lechner
- Alexandros Kontonikas
- M. Arghyrou
Citations in the corpus
- Labor Market Effects of Unemployment Insurance Design (2014, positive): “Dolls et al. (2012) find that in the presence of an unemployment shock the benefit system absorbs 48% of the shock in the EU, compared to 34% in the USA.”
- Automatic Fiscal Stabilisers: What They Are and What They Do (2012, positive): “By contrast, Dolls et al. (2012) find that automatic stabilizers give rise to a demand stabilization for income shocks of 4–22 % in the EU, depending on the share of liquidity constraints, and 6–17 % in the US, with large differences between the EU countries.”
- Microsimulation and policy analysis (2014, neutral): “Dolls et al. (2012) model a negative income shock where household gross incomes fall by 5% and an unemployment shock (with household income at the aggregate level decreasing also by 5%), covering both the US and a large number of the EU countries.”