On the Cyclical Bias in Government Spending

01/07/1998 |  Hercowitz Zvi, Strawczynski Michel


​First, this paper reports findings that the prolonged rise in the spending/output ratio in OECD

countries is related to a cyclical bias: countercyclical spending in contractions and procyclical

spending in expansions. Then, atfer briefly discussing the policy implications of the cyclical

bias, the paper adresses the recent experience of Israel under the Budget Deficit Reduction Law.




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