Abstract
Most countries have automatic rules in their tax-and-transfer systems that are partly intended to stabilize economic uctuations. This paper measures how eective they are at lowering the volatility of U.S. economic activity. We identify seven potential stabilizers in the data and include four theoretical channels through which they may operate in a business cycle model calibrated to the U.S. data. The model is used to compare the volatility of output in the data with counterfactuals where some, or all, of the stabilizers are shut down. Our rst nding is that proportional taxes, like sales, property and corporate income taxes, contribute little to stabilization. Our second
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