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The political and institutional determinants of fiscal adjustments and expansions: Evidence for a large set of countries

Federico M. Giesenow, Juliette de Wit and Jakob de Haan ()

European Journal of Political Economy, 2020, vol. 64, issue C

Abstract: Using annual data for 60 countries over 1980–2014, we study the drivers of fiscal adjustments, expansions, and their duration. In contrast to most previous studies, the identification of these fiscal events relies on breaks in their data generating process. Our findings suggest that a few political and institutional variables play a role in determining the occurrence and the duration of fiscal adjustments and expansions. The results also highlight the importance of analyzing the likelihood of fiscal events together with their persistence. Factors that do not affect the occurrence of fiscal adjustments or expansions may influence their persistence once initiated.

Keywords: Fiscal expansions; Fiscal adjustments; Political economy; Government ideology; Multiple structural breaks (search for similar items in EconPapers)
JEL-codes: H62 H3 P16 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.ejpoleco.2020.101911

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European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

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