Procyclical fiscal policy

Toshihiro Ihori and Keigo Kameda

Chapter 88 in Elgar Encyclopedia of Public Choice, 2025, pp 633-640 from Edward Elgar Publishing

Abstract: This chapter discusses procyclical fiscal policy, where government spending rises during booms and falls during recessions, reinforcing the business cycle. It notes that while advanced economies often follow counter-cyclical policies, developing countries tend to adopt procyclical ones. The chapter reviews both theoretical and empirical studies, exploring underlying factors such as international financial markets and political distortions, as well as empirical evidence, particularly from Latin American countries.

Keywords: Procyclical fiscal policy; International financial markets; Political distortions; Developing countries (search for similar items in EconPapers)
Date: 2025
ISBN: 9781802207743
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