The Economic Impact Of Alternative Fiscal Policies

Working paper on the impact of alternative fiscal policies on the economy of the USA - examines three policy rules over three periods representing different phases of the business cycle, (1) balancing the national budget, (2) a full employment budget and (3) a discretionary fiscal policy, and concludes in favour of the last. References and statistical tables.

Working paper on the impact of alternative fiscal policies on the economy of the USA - examines three policy rules over three periods representing different phases of the business cycle, (1) balancing the national budget, (2) a full employment budget and (3) a discretionary fiscal policy, and concludes in favour of the last. References and statistical tables.

This report provides actionable advice on how to design and implement fiscal policies for both development and climate action. Building on more than two decades of research in development and environmental economics, it argues that well-designed environmental tax reforms are especially valuable in developing countries, where they can reduce emissions, increase domestic revenues, and generate positive welfare effects such as cleaner water, safer roads, and improvements in human health. Moreover, these reforms need not harm competitiveness. New empirical evidence from Indonesia and Mexico suggests that under certain conditions, raising fuel prices can actually increase firm productivity. Finally, the report discusses the role of fiscal policy in strengthening resilience to climate change. It provides evidence that preventive public investments and measures to build fiscal buffers can help safeguard stability and growth in the face of rising climate risks. In this way, environmental tax reforms and climate risk-management strategies can lay the much-needed fiscal foundation for development and climate action.