Redistributive fiscal policies and business cycles in emerging economies

Amanda Michaud and Jacek Rothert

Journal of International Economics, 2018, vol. 112, issue C, 123-133

Abstract: Government expenditures are pro-cyclical in emerging markets and counter-cyclical in developed economies. We show this pattern is most pronounced in social transfers which are also a large component of total government expenditures (28–39%). The discrepancy in the cyclicality of spending on goods and services is smaller, by contrast, and the category accounts for just 11–16% of total government expenditures. In a small open economy model, we find disparate social transfer policies can account for about half of the larger cyclical volatility of consumption relative to output in emerging economies compared to developed. We analyze how differences in tax policy and the nature of underlying inequality amplify or mitigate this result.

Keywords: Fiscal policy; Emerging markets; Business cycles; Redistributive effects (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199618300217
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Redistributive Fiscal Policies and Business Cycles in Emerging Economies (2017)
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:eee:inecon:v:112:y:2018:i:c:p:123-133

DOI: 10.1016/j.jinteco.2018.02.003

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().