On graduation from fiscal procyclicality

• 成果类型: Article
• 署名作者: Frankel, Jeffrey A.; Vegh, Carlos A.; Vuletin, Guillermo
• 署名单位: Harvard University; University System of Maryland; University of Maryland College Park; Colby College; National Bureau of Economic Research
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2012.07.001
• 发表日期: 2013
• 页码: 32-47
• 关键词: Business cycle; institutional quality; cyclicality; Procyclicality; Countercyclicality; graduation; Emerging markets

摘要

In the past, industrial countries have tended to pursue countercyclical or, at worst, acyclical fiscal policy. In sharp contrast, emerging and developing countries have followed procyclical fiscal policy, thus exacerbating the underlying business cycle. We show that, over the last decade, about a third of the developing world has been able to escape the procyclicality trap and actually become countercyclical. We then focus on the role played by the quality of institutions, which appears to be a key determinant of a country's ability to graduate. We show that, even after controlling for the endogeneity of institutions and other determinants of fiscal procyclicality, there is a causal link running from stronger institutions to less procyclical or more countercyclical fiscal policy. (C) 2012 Elsevier B.V. All rights reserved.