Fiscal procyclicality in emerging markets: The role of institutions and economic conditions

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Fiscal procyclicality in emerging markets: The role of institutions and economic conditions. / Bergman, Michael; Hutchison, Michael M.

I: International Finance, Bind 23, Nr. 2, 2020, s. 196-214.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Bergman, M & Hutchison, MM 2020, 'Fiscal procyclicality in emerging markets: The role of institutions and economic conditions', International Finance, bind 23, nr. 2, s. 196-214. https://doi.org/10.1111/infi.12375

APA

Bergman, M., & Hutchison, M. M. (2020). Fiscal procyclicality in emerging markets: The role of institutions and economic conditions. International Finance, 23(2), 196-214. https://doi.org/10.1111/infi.12375

Vancouver

Bergman M, Hutchison MM. Fiscal procyclicality in emerging markets: The role of institutions and economic conditions. International Finance. 2020;23(2):196-214. https://doi.org/10.1111/infi.12375

Author

Bergman, Michael ; Hutchison, Michael M. / Fiscal procyclicality in emerging markets: The role of institutions and economic conditions. I: International Finance. 2020 ; Bind 23, Nr. 2. s. 196-214.

Bibtex

@article{2e091bb4ced84f46af8c8729e9297783,
title = "Fiscal procyclicality in emerging markets: The role of institutions and economic conditions",
abstract = "Procyclicality of fiscal policy is a common feature in emerging markets, by contrast with high‐income economies, and leads to greater business‐cycle am- plitudes. We investigate potential causes of fiscal procyclicality, including a host of economic and in- stitutional variables of especial import in emerging markets. We employ dynamic panel methods in a large sample of countries to investigate what factors are associated with fiscal cyclicality. We find that fiscal procyclicality is mainly due to procyclical fluctuations in government investment expenditure. In addition, we find that procyclical fiscal policy is positively associated with government debt levels, terms‐of‐trade volatility, and costs of foreign bor- rowing, while negatively associated with better gov- ernment efficiency. Only a weak association is found between International Monetary Fund program participation and fiscal procyclicality. Finally, we find that certain fiscal rules are associated with lower fiscal procyclicality and, in particular, balanced‐ budget rules may help mitigate the adverse cyclicality effects of high terms‐of‐trade volatility and govern- ment debt burdens in emerging markets.",
author = "Michael Bergman and Hutchison, {Michael M.}",
note = "The data that support the findings of this study are available from the corresponding author upon request.",
year = "2020",
doi = "10.1111/infi.12375",
language = "English",
volume = "23",
pages = "196--214",
journal = "International Finance",
issn = "1367-0271",
publisher = "Wiley-Blackwell",
number = "2",

}

RIS

TY - JOUR

T1 - Fiscal procyclicality in emerging markets: The role of institutions and economic conditions

AU - Bergman, Michael

AU - Hutchison, Michael M.

N1 - The data that support the findings of this study are available from the corresponding author upon request.

PY - 2020

Y1 - 2020

N2 - Procyclicality of fiscal policy is a common feature in emerging markets, by contrast with high‐income economies, and leads to greater business‐cycle am- plitudes. We investigate potential causes of fiscal procyclicality, including a host of economic and in- stitutional variables of especial import in emerging markets. We employ dynamic panel methods in a large sample of countries to investigate what factors are associated with fiscal cyclicality. We find that fiscal procyclicality is mainly due to procyclical fluctuations in government investment expenditure. In addition, we find that procyclical fiscal policy is positively associated with government debt levels, terms‐of‐trade volatility, and costs of foreign bor- rowing, while negatively associated with better gov- ernment efficiency. Only a weak association is found between International Monetary Fund program participation and fiscal procyclicality. Finally, we find that certain fiscal rules are associated with lower fiscal procyclicality and, in particular, balanced‐ budget rules may help mitigate the adverse cyclicality effects of high terms‐of‐trade volatility and govern- ment debt burdens in emerging markets.

AB - Procyclicality of fiscal policy is a common feature in emerging markets, by contrast with high‐income economies, and leads to greater business‐cycle am- plitudes. We investigate potential causes of fiscal procyclicality, including a host of economic and in- stitutional variables of especial import in emerging markets. We employ dynamic panel methods in a large sample of countries to investigate what factors are associated with fiscal cyclicality. We find that fiscal procyclicality is mainly due to procyclical fluctuations in government investment expenditure. In addition, we find that procyclical fiscal policy is positively associated with government debt levels, terms‐of‐trade volatility, and costs of foreign bor- rowing, while negatively associated with better gov- ernment efficiency. Only a weak association is found between International Monetary Fund program participation and fiscal procyclicality. Finally, we find that certain fiscal rules are associated with lower fiscal procyclicality and, in particular, balanced‐ budget rules may help mitigate the adverse cyclicality effects of high terms‐of‐trade volatility and govern- ment debt burdens in emerging markets.

U2 - 10.1111/infi.12375

DO - 10.1111/infi.12375

M3 - Journal article

VL - 23

SP - 196

EP - 214

JO - International Finance

JF - International Finance

SN - 1367-0271

IS - 2

ER -

ID: 247032942