Rent-seeking distortions and fiscal procyclicality

• 成果类型: Article
• 署名作者: Ilzetzki, Ethan
• 署名单位: University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2010.07.006
• 发表日期: 2011
• 页码: 30-46
• 关键词: Fiscal procyclicality; Fiscal policy in developing countries; Political distortions

摘要

Recent research has demonstrated that while government expenditures are countercyclical in most industrialized countries, they tend to be procyclical in developing countries. We develop a dynamic political-economy model to explain this phenomenon. In the model, public expenditures provide insurance to uninsured households, and optimal fiscal policy is countercyclical. The introduction of a political friction, in which successive governments disagree on the desired distribution of public spending, can lead to procyclical fiscal policies. Numerical simulations of the model allow us to compare quantitatively the relative role of common explanations for fiscal procyclicality. We conclude that political distortions in the fiscal process can explain fiscal procyclicality better than other common explanations, such as borrowing constraints and macroeconomic volatility. (C) 2010 Elsevier B.V. All rights reserved.