Was This Time Different? Fiscal Policy in Commodity Republics

Luis Cespedes and Andrés Velasco

No 19748, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We revisit the issue of fiscal procyclicality in commodity-rich nations -commodity republics in the nomenclature of this paper. Since commodity prices are plausibly a main driver of fiscal policy outcomes in these countries, we focus on the behavior of fiscal variables across the commodity cycle, in contrast to behavior across the output cycle, which has been the main focus of earlier research on fiscal procyclicality. We present evidence of reduced fiscal policy procyclicality in a number of countries. Our empirical results suggest that improvements in institutional quality have led to a more countercyclical fiscal policy stance in a number of countries. The presence of fiscal rules also seems to have made a difference: countries that use them displayed a larger shift toward fiscal counter-cyclicality between the two episodes.

JEL-codes: E62 F21 F32 F41 H12 H6 H63 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-mac and nep-opm
Note: IFM
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Citations: View citations in EconPapers (5)

Published as Céspedes, Luis Felipe & Velasco, Andrés, 2014. "Was this time different?: Fiscal policy in commodity republics," Journal of Development Economics, Elsevier, vol. 106(C), pages 92-106.

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Journal Article: Was this time different?: Fiscal policy in commodity republics (2014)
Working Paper: Was This Time Different?: Fiscal Policy in Commodity Republics (2011)
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