We develop a theoretical framework in which political and economic cycles are jointly determined. These cycles are driven by three political economy frictions: policymakers are non-benevolent, they cannot commit to policies, and they have private information about the tightness of the government...

Rebalancing growth toward domestic demand has emerged as a key postcrisis challenge for sustaining developing Asia’s rapid growth in the medium and long term. The central objective of this paper is to explore the role of fiscal policy in the region’s rebalancing process. What matters most...

Fiscal stimulus programs have contributed substantially to developing Asia’s faster and stronger than expected recovery from the global financial crisis. This may lead to political pressures for greater use of countercyclical fiscal policy in the postcrisis period. However, the countercyclical...

This paper investigates the average impact of government debt on per-capita GDP growth in twelve euro area countries over a period of about 40 years starting in 1970. It finds a non-linear impact of debt on growth with a turning point – beyond which the government debt-to-GDP ratio has a...

Against the background of the euro area sovereign debt crisis, our paper investigates the relationship between public debt and economic growth and adds to the existing literature in the following ways. First, we use a dynamic threshold panel methodology in order to analyse the non-linear impact...

This paper analyses the relationship between income inequality and economic growth through fiscal policy. To this end, we present and estimate two systems of structural equations with error components through which gross income inequality determines different fiscal policy outcomes, which...

This paper analyses the relationship between income inequality and economic growth through fiscal policy. To this end, we present and estimate two systems of structural equiation with error components through which gross income inequality determines different fiscal policy outcomes, which...

The purpose of this paper is to analyze the short run and long run effects of fiscal policy. The classical-Harrodian model developed in Moudud (2000, 1999), which is an extension of Shaikh (1995, 1992, 1991), provides a demonstration of dynamic fiscal policy context. It asserts that the there is...

This paper quantifies the welfare effects of the Spanish public investment in infrastructures. For that purpose, we use data on Spanish economy to calibrate a dynamic general equilibrium model with a representative agent, where public investment is financed by means of distortionary taxes. As is...

Empirically, the cyclical pattern of fiscal policy differs between developed and developing countries, with in particular much greater pro-cyclicality and volatility of public investment in developing countries. In this paper I provide a theoretical explanation for the observed differences by...