189
WEO and GFS data for the same selection of
countries. Two major problems arose. First, to
create a sufficiently long time series, various
GFS vintages needed to be spliced together,
leading to situations in which the components
listed above jumped at the splice points, appar-
ently simply because of reclassifications. This
led to spurious measures of fiscal impulses,
taking away the theoretical advantage of using
these data. Second, long time series of GFS
data are available only for central govern-
ment. This can present a deceptive picture of
changes in fiscal policy. For example, estimates
of fiscal impulses at the central level of govern-
ment were found to be countercyclical (with
the output cycle) for all countries. This finding
deserves more investigation, but is outside the
scope of this study.
Fiscal Impulse Measures
The elasticity-based fiscal impulse measure
used for the stylized facts, event analysis, and
regressions is a cyclically adjusted primary bal-
ance, calculated as
Y
t
real
capb
t
= r
t
– e
t
P
————,
Y
t
tr–real
where r
t
is the revenue-to-GDP ratio in period t,
e
t
P
is the primary expenditure-to-GDP ratio in
period t, and Y
t
real
/Y
t
tr–real
is real output divided
by potential (trend) output in period t. These
estimates of the cyclically adjusted balance
rely on output gap estimates derived using a
time-series filter, which may not work well when
supply shocks are frequent and large, as for
many emerging economies. Applying the same
elasticities across economies (as assumed for
emerging economies), where one has a low elas-
ticity of taxes to output and another has a high
elasticity of taxes to output could lead to results
implying that the former uses discretionary
fiscal policy more actively than the latter,
whereas in fact the cause is stronger automatic
stabilizers.
The regression-based fiscal impulse measure
used for the regressions is constructed as the
Table 5.5. List of Countries and Downturn
Episodes
Country Years in Downturn
Argentina 1975, 1976, 1978, 1981, 1982, 1985, 1988,
1989, 1990, 1995, 1999, 2000, 2001, 2002
Australia
1972, 1978, 1982, 1983, 1991, 1992
Austria
1975, 1978, 1981, 1988, 1997
Belgium
1975, 1977, 1987, 1993, 2003
Brazil 1970, 1981, 1983, 1990, 1992
Canada
1975, 1982, 1991, 1992
Chile
1972, 1973, 1975, 1982, 1983, 1999
China 1976, 1990, 1991
Colombia
1976, 1977, 1983, 1985, 1991, 1992, 1999
Czech Republic
1990, 1991, 1992, 1997, 1998
Denmark
1974, 1975, 1980, 1981, 1983, 1988, 1993,
2003
Egypt 1973, 1974, 1981
Finland
1977, 1978, 1991, 1992, 1993
France
1975, 1986, 1987, 1993, 1997
Germany
1975, 1982, 1989, 1990, 1993, 2003
Greece 1974, 1981, 1982, 1983, 1987, 1993
Hungary
1985, 1988, 1990, 1991
Iceland
1975, 1976, 1983, 1985, 1988, 1991, 1992,
2003
India 1972, 1974, 1979, 1980, 1987, 2002
Indonesia 1998
Ireland 1975, 1976, 1983, 1993, 1994
Italy
1972, 1975, 1980, 1983, 1993, 2003
Japan
1974, 1975, 1987, 1994, 1998, 1999
Malaysia
1971, 1975, 1985, 1986, 1987, 1998
Mexico 1977, 1982, 1983, 1986, 1988, 1995, 2001
Netherlands
1975, 1980, 1981, 1982, 1993, 2003, 2005
New Zealand
1972, 1976, 1977, 1979, 1983, 1991, 1992,
1998
Pakistan 1970, 1972, 2002, 2003
Poland
1980, 1981, 1982, 1984, 1990, 1991
Portugal
1975, 1984, 1985, 1986, 1993, 2003
Romania
1975, 1985, 1988, 1989, 1990, 1991, 1992,
1997, 1998, 1999
Slovak Republic 1990, 1991, 1992, 1993
Slovenia 1976, 1983, 1987, 1988, 1990, 1991, 1992
South Africa
1977, 1978, 1982, 1983, 1985, 1986, 1990,
1991, 1992
Spain
1971, 1981, 1985, 1986, 1993
Sweden
1977, 1981, 1983, 1991, 1992, 1993, 2003
Switzerland
1975, 1976, 1978, 1982, 1983, 1991, 1993,
2003
Turkey 1973, 1979, 1980, 1989, 1994, 1999, 2001
Ukraine 1987, 1990, 1991, 1992, 1993, 1994, 1996,
1997, 1998, 1999
United Kingdom
1971, 1974, 1975, 1980, 1981, 1991, 1992
United States
1970, 1974, 1975, 1980, 1982, 1991
1
Years in bold correspond to use of a fiscal stimulus in a
downturn, with fiscal stimulus defined as a decline in the cyclically
adjusted primary balance to GDP below 0.25 percentage point of
GDP.
aPPendix 5.1. data and emPirical methods