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To explain the fact that government spending and tax policy are procyclical in emerging and developing countries, we develop a model for the joint behavior of optimal tax rates and government spending over the business cycle. Our set-up relies on financial frictions, which have been shown to be...
Persistent link: https://www.econbiz.de/10012616597
This paper discusses conceptual problems of distinguishing "expenditure" policy from "tax" policy and "deficit" policy. The paper argues that each of these concepts is ill-defined and does not provide a useful basis for examining the government" underlying fiscal policies. The fundamentals of...
Persistent link: https://www.econbiz.de/10012478141
We contribute to the debate on the macroeconomic effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a...
Persistent link: https://www.econbiz.de/10012462178
This study presents intertemporal budgeting as of 1999 for all 50 U.S.states. Intertemporal state budgeting compares the present value of a state's projected receipts with the present value of its projected expenditures (exclusive of interest payments)plus the current value of its net debt...
Persistent link: https://www.econbiz.de/10012469646
It is well-known by now that government spending has typically been countercyclical in industrial countries and procyclical in developing economies. Most of this literature has focused on analyzing aggregate government spending or discretionary spending categories such as government consumption...
Persistent link: https://www.econbiz.de/10012496074
Persistent link: https://www.econbiz.de/10011922095
Every country faces what economists call an intertemporal (across time) budget constraint, which requires that its government's future expenditures, including the servicing of its outstanding official debt, be covered by its government's future receipts when measured in present value. The...
Persistent link: https://www.econbiz.de/10012459053
Demographic changes, such as those anticipated in most OECD countries, have many economics effects that impinge on a country's fiscal viability. Evaluation of the effects of associated changes in capital-labor ratios and the welfare and behavior of different generations requires the use of a...
Persistent link: https://www.econbiz.de/10012476222
National saving rates differ enormously across developed countries. But these differences obscure a common trend, namely a dramatic decline over time. France and Italy, for example, saved over 17 percent of national income in 1970, but less than 7 percent in 2006. Japan saved 30 percent in 1970,...
Persistent link: https://www.econbiz.de/10012464049
A large literature has documented that fiscal policy is procyclical in emerging markets and developing economies and acyclical/countercyclical in advanced economies. This paper analyzes fiscal procyclicality in commodity-exporting countries. It first shows that the degree of fiscal...
Persistent link: https://www.econbiz.de/10014322818