On Graduation from Fiscal Procyclicality

Jeffrey Frankel, Carlos Vegh and Guillermo Vuletin

No 17619, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 ...scal procyclicality, there is a causal link running from stronger institutions to less procyclical or more countercyclical fiscal policy.

JEL-codes: E62 F41 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-cba and nep-mac
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

Published as Frankel, Jeffrey A. & Vegh, Carlos A. & Vuletin, Guillermo, 2013. "On graduation from fiscal procyclicality," Journal of Development Economics, Elsevier, vol. 100(1), pages 32-47.

Downloads: (external link)
http://www.nber.org/papers/w17619.pdf (application/pdf)

Related works:
Journal Article: On graduation from fiscal procyclicality (2013)
Working Paper: On Graduation from Fiscal Procyclicality (2012)
Working Paper: On Graduation from Fiscal Procyclicality (2012)
Working Paper: On Graduation from Fiscal Procyclicality (2012)
Working Paper: On Graduation from Fiscal Procyclicality (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:17619

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w17619

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().