This paper analyses economic implications and the transmission mechanisms of different options for creating and using fiscal space. For creating fiscal space, we consider prioritizing expenditures, raising revenue, and scaled-up aid. Fiscal space is used for increasing health and education...

Intro -- Contents -- I. INTRODUCTION -- II. BASIC FRAMEWORK -- III. BASELINE CALIBRATIONS -- IV. DOMESTIC ADDITIONAL EFFORT, POVERTY TRAPS, AND "TAKEOFF" -- V. EXTENSIONS -- VI. CONCLUDING REMARKS -- REFERENCES.

This paper presents a simultaneous assessment of the relationship between economic performance and three groups of economic reforms: domestic finance, trade, and the capital account. Among these, domestic financial reforms, and trade reforms, are robustly associated with economic growth, but...