Dear Tudor, Ciumara,

I think you will find that fiscal policies vary with political ideologies. In the United States the Democrats are in favor of fiscal stimulus (government spending) as they have done in the current recession. The Republicans, on the other side, will hold on to some supply-side policies, where lower taxes will increase supply to the extent that tax revenue will increase (Laffer curve). The current textbook position is that a cut in the tax rate will affect both aggregate demand (AD) and aggregate supply (AS). Lower tax increases the incentive to work, creating more output, but some say that such incentive is small relative to the shift in demand that will occur.

For a recent article, I recommend the entry on fiscal policy in Thomas Cate edited, “An Encyclopedia of Keynesian Economics, second edition, Edward Elgar, 2013, pp. 190-194.

Hello, Tudor!

Please find below a paper including an interesting literature review

Blankenship, B. D. (2012). "Are We All Keynesians Now? Political Ideology and State Deficit Spending in the Great Recession." Student Pulse, 4(07). Retrieved from http://www.studentpulse.com/a?id=667

and also three other papers as attachment.

Best regards,

Monica Oehler-Sincai

I remember that Paul Krugman wrote that actually most government, including the republican in US, preach for free market for other countries but apply Keynesian policies.

You might also want to read Cusack's work

Cusack, Thomas R. 2001. "Partisanship in the Setting and Coordination of Fiscal and Monetary Policies"European Journal of Political Research, 40/1: 93- 115.

I can think of the following wp that may interest you:

Bugarin, Mauricio & Ricardo Ubrig. (2013) Partisan Voluntary Transfers in a Fiscal Federation: New evidence from Brazil. They suggest that "partisan transfers are broadly used in Brazil regardless of the ideological position or other characteristics of the party holding the presidency or the state government".

http://econpolrg.files.wordpress.com/2013/06/eprg-wp-2013-051.pdf

I suggest you to read the following papers:

Besley, Tim, "The New Political Economy," Economic Journal, Royal Economic Society, vol. 117(524), pages F570-F587, November 2007.

Besley, Tim, and Anne Case, "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, 41 (2003), 7-73.

Alesina, Alberto, "Credibility and Policy Convergence in a Two-Party System with Rational Voters," American Economic Review, 78 (1988), 796-805.

Ideology and taxation in Latin America, Stein and Caro, IDB, 2013

Dear Tudor,

These articles should be of assistance.

Yours,

David

Article All is Quiet in the Fiscal Front: Fiscal Policy for the Glob...

Article Fiscal policy and the Washington consensus: a Post Keynesian...

Article Fiscal Austerity and Quantitative Easing: A Modern Monetary ...

Article Conditions for a Sustainable Counter-Cyclical Fiscal Policy:...