This paper analyses the relations between the banking system fluctuations, on one hand, and taxation and public spending, on the other one, using a VECM methodology. We find some evidence of prociclicality of fiscal policy using variables such as government spending, taxes, and primary surplus....

In the 1970s, taxation of "windfall" profits from primary products and intervention in trade and production has tempted governments into expansionary fiscal policies while stifling the private sector and depressing growth. However, the experience of the recent coffee boom has so far been more...