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Fiscal policy and net capital inflows in developing countries are procyclical. A large amount of literature has examined this phenomenon and explored its consequences for aggregate fluctuations. Multilateral development banks (MDBs) are an important source of external finance for governments and play a key role in financing the execution of fiscal policy. Hence, understanding the behavior of MDB flows is key to gauge their contribution to macroeconomic volatility. This paper investigates the co-movement of sovereign lending from MDBs and private creditors with government expenditure, and finds that multilateral sovereign lending follows government expenditure, and that this correlation does not change if the government is running a surplus or a deficit. This finding raises doubts on the feasibility of MDBs to be counter-cyclical, unless the governments themselves implement counter-cyclical fiscal policies.

This paper examined the impact of fiscal policy on non-oil GDP in Saudi Arabia, the world’s largest oil exporter, over the annual period 1989–2018. We employed various cointegration methods within ...

The study used time series data from 1980 to 2018 and the Nonlinear ARDL approach to analyse the asymmetric impacts of fiscal policy on economic growth in Nigeria. The bounds test findings indicate...

The study observes the size of the Spanish State by analyzing the composition of the public spending policies in the Public Budget for the years 2007-2012. The government expenditure (central State, autonomous communities and local authorities) has not been reduced to the level required to achieve the control of the public debt. Furthermore, the fiscal adjustment must be done without tax increases because they are harmful for the dynamic efficiency of the economy. Secondly, the study explains the Production Structure of Capital from the perspective of the Austrian School of Economics and, including references and bibliography of previous studies, it shows how the tax increases are against the economic growth, because lower the private saving which is necessary in order to undertake investments and produce the goods of superior order that characterize the developed economies. Finally, the study explains the need to implement an Austerity Plan to reduce the public spending in Spain, in a serious way, by mean of: 1) cut the public budget in order to keep the public administrations in the medium and long term, 2) implement structural reforms to maintain balanced bud gets, 3) fa-cilitate the monitoring by the State Audits Agency, and 4) imple ment certain institutional barriers in the public Law in order to prevent the enlargement of the State by the interventionism of politicians that advocate public deficits and unlimited borrowing. Key words: Financial Crisis, Fiscal Policy, Public Finance (budget) deficit, So - vereign Debt, Public Administration, Economic Growth, Economic Policy. JEL Classification: G01, H30, H61, H62, H63, H83, O40, P16. Resumen: Este trabajo estudia el tamaño del Estado analizando la compo-sición de las políticas de gasto público en los Presupuestos Generales del Estado de los años 2007 a 2012. El gasto público no se ha reducido en las administraciones públicas (Estado central, autonomías y entidades locales) hasta el nivel requerido para lograr controlar el nivel de la deuda pública. Adicionalmente, el ajuste fiscal debe ser realizado sin subidas de impuestos que perjudican la eficiencia dinámica de la economía. En segundo lugar, el presente artículo explica la estructura productiva del capital según la Escuela Austriaca de Economía y razona, incluyendo refe-rencias y bibliografía de estudios previos, cómo las subidas de impuestos son perjudiciales para el crecimiento económico, porque se disminuye el ahorro privado previo que es necesario para acometer las inversiones y pro - ducir los bienes de órdenes superiores que caracterizan a las economías más desarrolladas. Finalmente, se explica cómo todavía existe una urgente necesidad de imple-mentar un Plan de Austeridad que reduzca el gasto público en España, de modo serio, basado en: 1) recortar y eliminar partidas presupuestarias para soste-ner las administraciones públicas en el medio y largo plazo, 2) implementar reformas estructurales que doten presupuestos equilibrados, 3) facilitar el control por la Intervención General del Estado, y 4) interponer barreras legislativas que eviten el aumento del tamaño del Estado con el intervencionismo de los políticos que propugnan déficit público y endeudamiento sin límites. Palabras clave: Crisis Financiera, Política fiscal, Déficit Público, Deuda So-berana, Administración Pública, Crecimiento Económico, Economía Política. Clasificación JEL: G01, H30, H61, H62, H63, H83, O40, P16.

The developing countries, including Jordan, face challenges and difficulties in adjusting their fiscal policy because there is an increasing demand for public expenditures that determine and justify public revenues. There is a relationship between the fluctuations in oil prices and the volume of public expenditure, which is proven by the standard study, and thus the following problem can be formulated: How much oil price volatility affects the public expenditure policy in Jordan. A Least squares method, Granger-causality tests was used. We find that that oil prices have significant impact on government spending This indicates the importance of variable X in the interpretation of Y and its significance. The study also fined that the oil price rates have a direct impact on government spending in Jordan, and the increase in oil prices by 1% leads to an increase in the general policies of spending in Jordan by 52.20%.

In a post-Keynesian growth model with positive saving propensity out of wages, this paper analyses the implication of different kinds of government expenditures on aggregate demand and economic gro...

The aim of this research is to evaluate and provide new evidence of the influence of regional fiscal policy with government expenditure instruments and tax revenue on economic growth in North Sumatra Province. The data used are quarterly data from 2011: 1 to 2017: 4 sourced from the Central Statistics Agency of North Sumatra Province (CSA). The analytical method used in this study is the error correction model (ECM) method. The findings of this study are that government expenditure (GE) has a positive and significant effect in the short and long term on the economic growth (PDB) of the province of North Sumatra during the study period. While tax revenue (TAX) in the long-run has a positive and significant effect, but in the short term, it has a positive but not significant effect on the economic growth (PDB) of the province of North Sumatra during the study period.

This is the first study to evaluate the effects of early pension withdrawal policies on tenures on unemployment payments in the COVID-19 context. We use a novel set of linked whole-of-population administrative records to examine more than half-a-million Australians who found themselves newly on an unemployment payment in the initial months of the COVID-19 pandemic. We estimate that receiving a lump sum of up to A$10,000 from superannuation accounts at the most acute phase of the pandemic, between April and June 2020, resulted in a 32 per cent lower exit rate from unemployment benefits inside the first six months of a spell on benefits, and 14 per cent inside a year of spell. Receiving a lump sum during the second window of opportunity – mostly in July and August 2020 and as a labour market recovery was underway – resulted in a 34 per cent lower exit from unemployment benefits inside the first nine months of spell, and 14 per cent inside fifteen months of spell. The jobseeking deterrence is ultimately temporary but it took close to eighteen months for an estimated convergence between withdrawers and those that didn't withdraw. 162,000 withdrawers with completed spells on average spent an additional 7 weeks on unemployment payments, translating to 8 million additional days in aggregate, and implying A$580 million in additional pandemic fiscal expenditure.

This study aimed to provide a game-theoretic interpretation of the analyses of involuntary unemployment by deficiency of aggregate demand and fiscal policy to achieve full employment using an overlapping generations model. We showed that involuntary unemployment is in a Nash equilibrium of a game with a firm and consumers. Moreover, we showed that full employment can be achieved through fiscal policies that create budget deficits in recessionary conditions with involuntary unemployment. Once full employment is achieved, it can be sustained without a budget deficit.

The purpose of this paper is to examine the long-term impacts of fiscal variables on economic growth in Singapore and Sri Lanka from 1972 to 2017. Autoregressive Distributed Lag (ARDL)-ECM approach and some diagnostic and specification tests were employed to determine the impact of fiscal variables on economic growth on time series data. The results confirm that government expenditure, government revenue and investment expenditure positively and significantly affect in Singapore as well as Sri Lanka’s economic growth in the long run. This result is consistence with the theory of Keynesian views. Moreover, the Toda-Yamamoto’s Granger causality results reveal that there is bidirectional causality between inflation rate and economic growth in Singapore. Further, the results show that bidirectional causality relationship between investment expenditure and economic growth in Sri Lanka. Grounded on the premises that there are little or no studies on the impact of fiscal variables on Singapore and Sri Lankan economy with more recent data., this paper provides new evidence on the potential effect of fiscal variables on Singapore’s and Sri Lankan economic growth over the last four decades.

The study assessed the effects of external shocks on fiscal policy in Nigeria. Vector auto-regression VAR estimating technique is adopted to achieve the set objectives of the study. The VAR model comprises of the following variables GDP, oil output, oil price, government revenue, government expenditure, external reserve, exchange rate, fiscal balance, and non-oil export. These variables represent the external shocks, the growth variables, fiscal variables and some other macroeconomic variables. The VAR results show that oil price and non-oil export are the most important external shocks affecting fiscal policy in Nigeria. It was also discovered that public debt shock has no significant impact on government expenditure. In addition, external reserve and exchange rate shocks also have a significant impact on fiscal policy. Finally, government expenditure shock failed to have a significant impact on the GDP. The implication of these results is that the effectiveness of fiscal policy in achieving macroeconomic objectives in Nigeria depends on these identified shocks.

Today, the question of introducing state-of-the-art economic management technologies in Ukraine is very urgent, especially in the area of fiscal policy. Among all instruments of such policy, it is necessary to distinguish fiscal rules, which have positively proved themselves in foreign countries in the process of managing economic fluctuations, in overcoming economic crises and achieving sustainable economic growth. So, the study of the essence of such rules as the main tool for anti-cyclical regulation of the national economy, the peculiarities of their impact on the socio-economic situation of the country and the possibility of their introduction in Ukraine are urgent questions. The purpose of the article is to study the impact of fiscal rules on the economic situation in the country, as well as the definition of place of such tools in the system of counter-cyclical regulation of the economy and the feasibility of their implementation in fiscal practice of Ukraine. It was established that the introduction of fiscal rules is associated with economic fluctuations, economic crises that shocked the economies of the world during the twentieth century – beginning of the XXI century. It was found that the introduction of fiscal rules is preceded by strategic planning and forecasting of the economic development of the country, which should be based and include a set of indicative indicators necessary to achieve future goals, and not a spontaneous solution, which can lead to further aggravation economic and social situation. The fiscal rule is a multifaceted instrument that aims to achieve overall macroeconomic stabilization and economic equilibrium. The authors believe that fiscal rules are the psychological tool for the government to enforce fiscal policy discipline. In the socio-economic conditions of Ukraine, it will be advisable to introduce fiscal restrictions that will serve to shape discipline, transparency in the budget process, debt policy, government spending policy and tax policy. Transparent, predetermined parameters will lead to the formation of a positive investment climate, increase the level of confidence in the government, reduce the shadow economy, and increase the social standards of living.

In this paper, we present a Dynamic General Equilibrium (DGE) model to address the macro-fiscal vulnerabilities and the effects of fiscal policy on growth and employment in Algeria. We first discuss a baseline scenario throughout the projection period, 2021-2040 and then conduct several experiments; an increase in the efficiency of public spending on infrastructure investment, a gradual reduction in the share of non-interest government spending in GDP, the same gradual reduction in spending with a permanent increase in the share of investment in infrastructure in total noninterest government expenditure, and a composite fiscal reform program, respectively. The results show that with a well-designed fiscal program, there may be no trade-off between fiscal consolidation and economic growth.

Using disaggregated data based on the classification of functions of government (COFOG), this study seeks to verify the Keynesian view versus Wagner’s law on the relationship between government expenditure and output, considering Turkey as a case study. To do so, the study attempts to capture the nature of the causal relationship between the two variables by applying linear and nonlinear Granger-causality tests. Rather than Wagner’s law, the empirical findings of the study provide supportive evidence for the Keynesian view, subject to the economically meaningful components of government expenditures considered. Overall, the empirical findings show that government expenditures on defense, economic affairs, education, health, housing and community amenities, and social protection positively affect output that comes out through fiscal multiplier and investment-accelerator mechanisms proposed by John Maynard Keynes.

This Public Expenditure Review (PER) of the Kyrgyz Republic is part of the programmatic PER, which aims to help the government strengthen macro-fiscal policies and enhance the effectiveness and efficiency of public spending. To this end, this PER builds on progresses made since 2014 PER and identifies further areas for improvement. It also identifies efficiency-enhancing fiscal measures that can help create the much-needed fiscal space to meet the country's competing development needs in addressing human capital and infrastructure gaps. This PER-1 (phase 1 of the PER) focuses on macro-fiscal and overarching public expenditure management and cross-cutting policy issues by examining the country’s: (1) stance of fiscal policy, (2) public expenditure management, (3) tax policy and administration, (4) fiscal and quasi-fiscal operations of state-owned enterprises (SOEs), (5) inter-governmental transfers and subnational finances, and (6) wage bill management. Phase 2 of the PER focused on efficiency and effectiveness issues in health, education, and sustainability of the pension system.

Contributing to the controversial issue on the impact of government spending on economic growth, this paper shows that government spending has long-run impact in stimulating aggregate output in Thailand during the floating exchange rate regime. The results reveal that the long-run relationship between aggregate output, government expenditures and private consumption is stable. Based on quarterly dataset during 1997Q3 to 2019Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime. Furthermore, the traditional version of the Wagner’s law is supported since an expansion in aggregate output causes government expenditure to increase. Therefore, the findings in this paper support both Keynesian hypothesis and the Wagner’s law.

This paper sought to examine whether Purchasing Power Parity (PPP) can become a predictor model for exchange rate. We try to determine whether at least some variant of the PPP-oriented rule may be used in Malaysia as a basis for exchange rate policy. Two methods are used to examine whether longrun PPP holds. The first method is testing whether or not the real exchange rate follows a random walk. The second is the Johansen procedure to test for a long-run relationship between real exchange rate and real economic shocks. It is found that the ringgit real exchange rate follows a random walk, which means PPP does not hold. However, supportive evidence is also seen that there is a long-run relationship between ringgit real exchange rate with current account balance and government spending. The policy implication of this important finding is that some variant of the PPP-oriented rule may be used in Malaysia as a basis for exchange rate policy. Government spending and current account balance can be used as a guide to determine the movement of real exchange rate. The error-correction model shows that real exchange rate, government spending and current account all adjusted to long-run equilibrium. It has a very important policy implication. Fiscal policy, which controls government expenditure, can be used as a tool to manage exchange rate. Measures have to be taken to increase export while at the same time import has to be reduced to maintain the current account balance to be in surplus. This will strengthen the ringgit, thus helping to stabilize the ringgit exchange rate.

Fiscal procyclicality, meaning co-movement between government expenditure and macroeconomic fundamentals, is an important feature of business cycle dynamics for emerging and poor economies. I estimate a panel SVAR to investigate the reasons for fiscal procyclicality. The analysis sheds light on the role of external financial constraints in shaping fiscal policy. My findings suggest that the response of emerging governments to output fluctuations is similar to that of developed governments. However, emerging governments curtail spending in response to increases in the sovereign borrowing rate, which forces their consumption expenditure to act more procyclically. Using counterfactual analysis, I show that the key forces behind fiscal procyclicality are the sensitivity of government spending to international borrowing costs and the procyclical nature of these costs for emerging economies.

This paper discusses the current situation with government revenue, expenditure, and deficits in the economies of Central Asia and considers the options available to use fiscal policy to support the technological development of these economies. It analyses contemporary issues in the public finances of these countries including the size of their governments, efficiency losses due to uneven taxation of different sectors and entities, ineffective foreign aid, and government expenditure inefficiency. The paper provides recommendations for the modification of fiscal policies to promote economic diversification and productivity growth in Central Asia.

This paper investigates the long-run relationship between fiscal policy and economic growth in Asia between 1982 and 2001 through the application of Pedroni’s Cointegration approach. It examines two different channels through which fiscal policy can affect long-run economic growth in Asian countries. The first channel is when components and aggregate government expenditure affect the real per capita GDP, and the second channel is when the distortionary taxation, budget balance, and aggregate of other fiscal variables affect the real per capita GDP. There is a positive and statistically significant impact of health and education expenditure, aggregate of government expenditure, and aggregate of other fiscal variables on real per capita GDP. It was found that the defence expenditure, distortionary taxation, and budget balance are significantly and negatively related to real per capita GDP. The Pedroni Cointegration result establishes a long-run relationship between fiscal policy and economic growth.

This study investigates the long run relationship between government expenditure and the GDP in the State of Qatar with a focus on the non-mining and quarrying GDP during the period 1980-2017 using the nonlinear autoregressive distributed lag (NARDL) model. The NARDL model results show an asymmetric impact of government expenditure fluctuations as the increase in both government current and capital expenditures leads to a positive and significant effect on the Qatari's non-mining GDP, whereas the decrease in both types of government expenditure does not significantly affect the non-mining and quarrying GDP. This leads us to conclude that the non-mining and quarrying GDP is unresponsive to government budget cuts. The previous result should encourage policymakers to make bold budget cut decisions, when needed, without being afraid of the potential negative effects on non-mining and quarrying GDP. Copyright 2020 Inderscience Enterprises Ltd. Scopus

Pro-cyclical fiscal policy has raised concern in many emerging economies due to its adverse consequences to the economic activities. This paper takes a different approach to the issue, which aims to examine the bidirectional relationships between fiscal policy and stock market activities, using a panel of 12 emerging Asia-Pacific economies from 1990 to 2015. We estimate a variety of Panel Vector Autoregressive models to test for the consistence of the results. The empirical results show that fiscal policies in these countries tend to a pro-cyclical path in responding to stock market movements. The pro-cyclical behavior is found with both government expenditure and government revenue. On the other hand, a fiscal consolidation attempt has a rewarding effect on stock prices.

This paper studies the effects of government spending on China’s output with a threshold structural vector autoregressive model. The empirical findings suggest that increasing government expenditure significantly raises China’s aggregate output. Contrary to the evidence of countercyclical fiscal multipliers in the advanced economies, China’s fiscal multiplier tends to be procyclical, suggesting a novel fiscal policy transmission mechanism in China.

The purpose of this article is to estimate government expenditure multiplier in the Republic of Armenia via a SVAR model. The model is evaluated using the data over the period from 2004 to 2017 and accounts for a structural break, which occurred in the year 2009. In addition, it controls for the dynamics of copper prices and output of the Russian Federation. The results indicate that the response of output to the government expenditure shock is quite strong right after the discretionary change of fiscal policy. The multiplier reaches its peak on impact with the estimated value about 3. However, there is a substantial uncertainty regarding the exact value of the multiplier and the 95 % lower bound estimate is only 0.8. Moreover, the value of the government expenditure multiplier decreases over time rather quickly. In the medium term the impact of the government expenditure shock on output is negligible. Overall, the authors conclude that government expenditure policy can be used successfully to stabilize the dynamics of output in the event of substantial recession or boom. Estimates obtained in this study do not contradict the results of previous researches dedicated to the evaluation of fiscal multipliers in the Republic of Armenia.

The aim of the article is to present the General Government expenditure on public services in the European Union countries, including selected aspects of fiscal policy and public governance. In order to achieve this aim, the varius research methods are used. The data used in the study comes from the following databases: Eurostat, OECD, PORDATA. The survey covers the period of 2007–2016. We note that expenditure on public services is an important determinant of fiscal policy and public governance. The originality of the analysis presented in the article is intended to emphasize the importance of GG spending on public services such as health and education spending in the socio-economic development of the country.

Summary In this paper we explore the effects of fiscal policies and growth on measures of household welfare across the distribution of expenditures for two African countries: Rwanda and Tanzania. We explore the effect of government expenditures on expenditure growth in each quintile of the expenditure distribution and the effect of growth for each group. We find that the benefits of growth are concentrated among the better-off sectors of the population in these two countries (perhaps to the detriment of the poorer sectors) by looking at the effects within a country and across different groups of households and administrative entities. We exploit variation in expenditures and growth across and within regions of each country to estimate the elasticities of expenditure with respect to fiscal expenditure and mean expenditure growth at different points of the expenditure distribution, using household survey data and government expenditure data at the district level. We find that, overall, mean expenditure growth benefits the top expenditure groups. The welfare spillovers are mostly present for top 20% of the expenditure distribution, with the middle of the distribution in Tanzania responding slightly to these spillovers. Public/social expenditures do not appear to affect inequality considerably, but do tend to work toward decreasing inequality. However, mean expenditure growth is related to increases in inequality in the sense that the richest sectors of the population benefit the most from growth. We find that the growth elasticity of expenditure is only above one for the top quintile in both countries. In Tanzania, a 1% increase in average household expenditure is related to a 1.96% expenditure growth in the top quintile and 0.43% in the third quintile. In Rwanda, a 1% increase in average household expenditure is related to a 1.93% increase in household expenditure in the top 20% of the distribution.

This paper empirically revisits the validity of Wagner’s proposition in a panel of 149 developing countries between 1980-2015 by focusing on different components of government expenditure. We rely on an ARDL approach which allow us to uncover short and long-run cyclicality coefficients. Our results do not overwhelmingly support the existence of higher than unity long-run elasticities of government spending components vis-a-vis economic growth, suggesting that the Wagner’s regularity is more the exception than the norm. Moreover, the case for voracity is fading away as developing countries catch-up the development ladder and graduate from procyclicality. In fact, most short-run elasticities are countercyclical. Finally, some macroeconomic and institutional and political characteristics affect the degree of government spending cyclicality. info:eu-repo/semantics/publishedVersion

Resumen Tanto la alta concentración del ingreso como el regular desempeño económico de Colombia se explican, por lo menos en alguna parte, por las falencias que ha tenido su política fiscal. En este sentido, el artículo señala que una política fiscal robusta, con mayor gasto social y mayor recaudo tributario, es esencial para mejorar la distribución del ingreso y contribuir a un mayor crecimiento económico. Sostenemos que no existe un dilema entre un mayor peso del Estado en la economía y un mayor fortalecimiento de los mercados, ni tampoco un dilema entre crecer o distribuir. Por el contrario, proveemos evidencia teórica y empírica que apoya la idea según la cual una mayor equidad económica favorece un crecimiento económico mayor y más estable. De este modo, la política fiscal está en capacidad de mejorar las condiciones sociales de la población más vulnerable, no solo redistribuyendo mejor los recursos disponibles, sino también haciendo que estos sean mayores en el largo plazo. Clasificación JEL: E62, N16, O11, O23, O54. Abstract Colombia’s high concentration of income and the moderate economic performance are both explained, at least in some part, by the shortcomings of its fiscal policy. In this sense, this article points out that a robust fiscal policy, with greater social spending and greater tax collection, is essential to improve the distribution of income and contribute to greater economic growth. We maintain that there is no dilemma between a greater weight of the State in the economy and a greater strengthening of markets, nor a dilemma between growth or distribution. On the contrary, we provide theoretical and empirical evidence that supports the idea that greater economic equity favors greater and more stable economic growth. In this way, fiscal policy is able to improve the social conditions of the most vulnerable population not only by redistributing better the available resources, but also by making them larger in the long term. JEL Classification: E62, N16, O11, O23, O54.

The study aimed to examine the impact of macroeconomic variables of the Saudi economy as in Gross Domestic Product (GDP), Government Expenditure (G), Economic Openness (OPE), Inflation Rate (CPI) and the Bank Deposits (DS) on the credit provided by Saudi banks (BF), on annual time series data between 1970-2012. To investigate this relationship, the study used Autoregressive Distributed Lag method (ARDL) to measure the long-run and short-run impact, At that the E-views 8.1 has been used for analyze the cointegration,the diagnostic, the reliability - stability tests, and the forecasting behavior of the model. The study found that (BF) is affected positively by (GDP) growth rate in the long-run. Also the (BF) has been affected negatively in the short and long-run by inflation rates (CPI) and government expenditure (G). Consequently the Contractionary Fiscal Policy in recent period will not lead to reduce the financial performance of Saudi banks, and the growth of (GDP) in the future will have positive impact on the financing capacity of the Saudi banking sector.

We jointly estimate credit and fiscal multipliers in China. We use the tenure of the provincial party secretary, interacted with the type of stimulus used in other provinces, to obtain separate instruments for provincial credit and government expenditure. We estimate a fiscal multiplier of 0.8 and a credit multiplier of 0.2 in 2001-2015. The multipliers have changed over time. The fiscal multiplier has increased from 0.75 in 2001-2008 to 1.4 in 2010-2015. The credit multiplier has declined from 0.17 to zero over the same periods. Our results suggest that reducing credit growth in China is unlikely to disrupt output growth, whereas fiscal policy may be effective in supporting macroeconomic adjustment.

Fiscal policy is procyclical in developing countries. An ample literature has explained this fact and explored its consequences for aggregate cyclical fluctuations. Multilateral Development Banks (MDBs) are an important source of finance for governments and therefore play a role in the execution of fiscal policy. In this paper, we assess whether MDB disbursements to the sovereign commove with government expenditure and with private sovereign lending, during different stances of fiscal policy and during fiscal crises. We find that multilateral lending to the sovereign is correlated with government expenditure and this correlation does not change if the government is running a surplus or a deficit. However, when the sovereign is having a fiscal crisis associated with unsustainable fiscal policy, this relationship disappears for Regional Development Banks (RDBs) and the World Bank (WB). Finally, we find evidence of synchronization between MDBs and IMF during fiscal crises.

Oil-exporting countries face challenges in the conduct of fiscal policy owing to volatile oil revenues, especially in countries with weak institutions. Many oil exporters have established oil funds to delink government expenditure from oil revenues; however, their effectiveness remains unresolved. This paper examines the roles of oil funds and institutional quality in reducing fiscal procyclicality and macroeconomic volatility in 42 oil-exporting countries from 1960 to 2014 using panel vector autoregression techniques. The results show that oil funds are effective in reducing fiscal procyclicality in countries with high institutional quality. There is also a reduction in the procyclical bias in those with low institutional quality but the statistical evidence is weak. Nevertheless, oil funds are associated with reduced volatility of government consumption and the real exchange rate in countries with low institutional quality. These findings give credence to the macroeconomic stabilization role of oil funds but also reinforce the importance of good institutions.

This paper examines the effects of fiscal policy on CO2 emissions using Vector Autoregressions on U.S. quarterly data from 1973 to 2013. In particular, we analyze the short- and mid-term interactions between fiscal policy and emissions by using sign restrictions to identify the policy shocks. We construct the impulse responses to linear combinations of fiscal shocks, corresponding to the scenarios of deficit-financed spending and deficit-financed tax-cuts. To consider possible variations of the effect of fiscal policy according to the sources of pollution, we distinguish between production- and consumption- generated CO2 emissions. The results point out that the implementation of expansionary fiscal spending provides an alleviating effect on emissions from both sources of the pollutant, whereas deficit-financed tax-cuts are associated with an increase on consumption-generated CO2 emissions. The exact pattern of the effects depends on the source of emissions, the scenario of fiscal policy that is implemented and the functional class of government expenditure being increased.

This paper examines the effects of fiscal policy shocks on private consumption in Nigeria. Albeit, there is a considerable number of works examining the effects of fiscal policy shocks on private consumption globally but in Nigeria, no study has used the structural VAR approach by Blanchard and Perotti (2002) as used in this paper. This approach relies on institutional information about the tax and transfer systems and the timing of tax collection to identify the automatic response of taxes and spending to private consumption as well as to infer fiscal shocks. The key result of this paper is that positive government spending shocks in Nigeria have an instantaneous negative effect on private consumption. The effect becomes significant in the period following the shock. Also, positive tax shocks have a negative effect on private consumption in the period of a shock and the effect becomes statistically insignificant afterwards. On this premises, one-off changes in government spending and taxes in Nigeria are long-lived and short-lived respectively. Thus, the government expenditure changes can be used to support private consumption in the long-run while that of taxes can only be used to support private consumption for a short period.

The debate on the use of fiscal policy as a tool of macroeconomic stabilization is quite vehement in Australia and abroad. This paper contributes to the discussion by estimating government expenditure multipliers for Australia and one if its states, Queensland. Impulse response functions derived from a SVAR model indicate that the multipliers are positive and greater than one. This suggests that government consumption expenditure should be used counter-cyclically to stabilize output. However, a chronology of business cycles and government expenditure dynamics reveals that this is not frequently the case. At both national and state level, government consumption expenditure “aligns” with the business cycle only about one third of the times. This means that more often than not, fiscal policy is run pro-cyclically or (at best) a-cyclically. Moreover, from the point of view of Queensland, federal and state fiscal policies are jointly aligned with the Queensland business cycle only 20% of the times. Conversely, federal and state fiscal policies are jointly misaligned with the Queensland business cycle in 60 quarters out of 116, i.e. about 50% of the time. This misalignment is a factor of destabilization of the Queensland economy.

The paper estimates a system of structural equations to determine the effect of US government expenditure on the business cycle of other OECD countries. The estimated coefficients from the system are used in a simulation exercise to compute the dollar value of the international multiplier of the US government expenditure. This multiplier turns out to be positive: an extra dollar of the US government expenditure increases foreign output by 7 cents on average. However, the size of the multiplier significantly differs across sub-samples of countries and over time.

Thestudy examined factors surrounding measures of fiscal policy and its effect on economic growth in Nigeria from 1981 2014. The main objective of the study is to ascertain the effect of fiscal policy measures on growth of the Nigerian economy. It was expected that an increase in government expenditure ceteris paribus will increase investment and hence increase income via the multiplier. And that a higher tax reduces disposable income, investment opportunities and inhibits growth of the real gross domestic product. The researcher used Ordinary Least Squares OLS technique of multiple regression models using statistical time series data from 1981 2014. The statistical result showed a positive relationship between the dependent variable real gross domestic product and the Independent variables Government Expenditure and Taxes . This implies that the government expenditure is a strong determinant of economic growth especially when properly directed towards the provision of adequate basic infrastructural facilities to stabilize investment activities. The regression result also indicates that tax has a negative sign as a result of poor tax administration in Nigeria and over dependence of government on earnings from crude oil in funding her projects. Consequently, the result agreed with the endogenous theory, which supports that government involvement through the use of fiscal policy could step up economic activities hence growth. Based on the results, it was therefore suggested that there should be a total renovation of the tax system in Nigeria and the federal government of Nigeria should exaggerate her spending especially in the productive sectors of the economy that has the capability to contribute to economic growth in the country. Elosiuba, J. N. | Chukwuma, Edwin Maduka "Implications of Fiscal Policy Measures on Growth of the Nigerian Economy" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-1 | Issue-6 , October 2017, URL: https://www.ijtsrd.com/papers/ijtsrd5766.pdf

Purpose of the article: An examination of budget performance’ relationship with fiscal administration in selected countries of sub-saharan Africa is the thrust of this study. Secondary data from 12 countries in Sub-Saharan Africa (SSA) for the period (2002–2016) was sought and analysed. Methodology/methods: Analytical tools deployed for statistical analysis include the Ordinary Least Square (OLS) regression method, correlation analysis, variance inflation factor (VIF) tests for multicollinearity, and Breusch-Pagan/Cook Weisberg test for heteroskedasticity. 5% level of test of significance was employed to measure the altitude of statistical association between all variables. Scientific aim: Efforts were made to empirically ascertain by means of available statistics the relationship between budget deficits and fiscal administration in SSA. Findings: Indications from this study implied that countries SSA recorded trends of significant levels of revenue decline and fiscal balances have deteriorated despite the various acclaimed adjustments in the expenditures profiles by governments in the region. Also a significant relationship was found between budget deficit and fiscal administration among countries in SSA. Conclusions: Since budget deficit has remained a recurring decimal in SSA, countries in the region have resorted to high reliance on borrowed funds to finance the increasing amounts of budget deficits; the consequence being the exposure of countries in SSA to high cost of borrowing.

A common criticism of balanced budget fiscal rules is that they increase the consumption volatility of financially constrained households who are unable to smooth consumption. This paper evaluates the welfare consequences of simple fiscal rules in a model of a small commodity-exporting country with a share of financially constrained households, where fiscal policy takes the form of transfers. A main finding is that balanced budget rules for commodity revenues often outperform more sophisticated fiscal rules where commodity revenues are saved in a Sovereign Wealth Fund (SWF). Because commodity price shocks are typically highly persistent, the households' current income is close to their permanent income, making balanced budget rules close to optimal. For commodities like oil, where price shocks are highly persistent, it is optimal to spend more than two-thirds of windfall revenues in times of high prices, and in some cases even spend the entire windfall. But for commodities where price shocks are less persistent, like bananas or sugar, the optimal rule involves spending less than half of above-average commodity revenues (with the rest saved in a SWF). It is also best to respond counter-cyclically to non-resource GDP shocks, because those shocks are less persistent (and also affect households other income). The government does not have the ability to perfectly smooth constrained households’ consumption without adversely affecting unconstrained households.

The debate on the effectiveness of fiscal policy as a tool for promoting growth and development remains inconclusive given the positions of economic theories as well as conflicting results of past studies. This study sought to determine the effect of fiscal policy variables on the economic growth of sub-Saharan African countries. The ex-post facto research design was adopted which enabled the study to make use of secondary data from sub-Saharan African Countries in a panel least squares. The result of the linearly modelled hypotheses tested using the panel data estimation technique under the fixed-effect assumptions revealed that Government productive and unproductive expenditures, distortionary tax (a proportional tax on output at rate) and non-distortionary taxes have significant effects on the economic growth of sub-Saharan African countries. Findings also revealed that budget balances of sub-Saharan African countries have a positive but insignificant effect on the economic growth of sub-Saharan African countries.

Every government is a captive institution both from demand side special interests and supply side take over by insiders operating for their own benefit and at the expense of the electorate. State national decline often arises from special interests corrupting a country’s institutions. Such narrow captive interests include crony capitalists (bankers), consumer activists, economic elites and labour unions. Though media does pay less censored attention to government insider-rulers, elected officials, bureaucrats, and public employees, their sphere of economic influence is seismically destructive. In Kenya, these insiders have the ill motive, means and opportunity to co-opt political power for their own benefit and at the expense of national well-being. Political rulers with exorbitant influence in banking and media have enslaved the country for its entire “independent” life. Corruption is an intricate web of fabric upon which fiscal policy is written on. Political dynasties continue to thrive fuelled by constant media hero worship, economic sabotage and outright brute elimination of any threat to their dominance.

The main goal of this paper is to investigate the effectiveness of fiscal policy in Brazil. With a sample spanning from 1997 to 2014, we are not able to obtain evidence of the relevant impacts of fiscal stimuli on output, even when altering both the methodology and the model specifications. Our most robust estimate of the government spending fiscal multiplier is approximately 0.5. Higher multipliers are reported using Threshold Vector Autoregression (TVAR) and other approaches, but they are not robust because of specifications issues, i.e., failure to accept the null hypothesis in the specification tests. Finally, we discuss plausible explanations for such ineffectiveness of fiscal policy. Among several factors highlighted by the economic literature, we suggest that the consistent increases in Brazilian government expenditure undermine the importance of fiscal shocks. This effect could explain the fiscal conundrum manifested in Brazil.

China's public finance is characterised by a pro-growth taxation system, growth enhancing government expenditure and an expansionary fiscal policy. However, reforms are needed to tackle rising income inequality and worsening social and environmental problems, including more public spending and more progressive taxes. Measures are also needed to resolve rising local government debt. The recently concluded Third Plenum has made these its top priorities and announced various policy initiatives.

Fiscal policy in developing countries follows predominantly the business cycle. By aggravating economic contractions, procyclicality has adverse effects on the prospects for countries and their international trading partners. Recent work identified as a leading cause for procyclicality institutional shortcomings. This paper sets out to examine whether fiscal cyclicality is determined by social capital, which in many ways shapes and constrains the institutional environment. The study confirms a causal and robust negative relationship between social capital and procyclicality, whereby the results indicate that this relationship partially runs through the adoption of fiscal rules and the extent of corruption.

Keeping in view the objective that is to observe the usefulness of fiscal policy on real GDP of Pakistan, the study collects time series data from 1976 to 2012 through reliable sources of statistical bureaus of Pakistan. Using Johansen Cointegration test, the long run results demonstrate investment and government expenditure as raising factor for real GDP of Pakistan while GDP Deflator and government revenue as de-motivating factor for real GDP of Pakistan in the long run.

Fiscal policy can have positive effects on economic growth through changes in the structure of total expenditure, i.e. reductions in unproductive or current expenditure, lower taxes, and higher government investment – provided that it is offset by a decrease in unproductive expenditure. Such changes reduce the size of government, which positively affects output growth. Lower volatility of government investment expenditure is also growth-enhancing. However, the strongest growth effects are found for improvements in the fiscal balance, in particular if achieved by a reduction in the size of government expenditure. This suggests that a cautious fiscal policy stance may be the best way to improve growth.

This paper studies the effects of fiscal stimuli on the real GDP of the United Kingdom for the period of 1997 through the first quarter of 2017. Structural vector autoregressive and vector error correction models are estimated. Impulse responses from both models provide support for the Keynesian view that fiscal stimuli are associated with rises in the real GDP. Variance decomposition analysis shows that over time, depending which model is considered; tax cuts impart a positive effect on the real GDP in the range of 5 to 20 percent. Government expenditure shocks account for 8 to 15 percent of variations in the real GDP based on the two models. The multipliers of tax cuts and government expenditures initially rise reaching a peak in the ninth quarter and decline to 1.60 and 1.74 in three years, respectively.

Theoretical developments, improved methodologies and more extensive data have helped generate a dramatic increase in the literature testing for the impact of government size and fiscal policy on economic growth in recent years. We review a range of the more recent evidence and examine (1) the consistency or robustness of the results; (2) how these results differ from the earlier literature and (3) their usefulness as a guide to policy reform in practice. We find that the last decade has produced more robust evidence and more plausible orders of magnitude on the impact of fiscal policy on growth. However, the value of this evidence remains limited as a basis for quantifying macro-economic responses to fiscal policy reform in practice.