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Fiscal policy cyclicality in South Asian economies

Radhika Pandey () and Ila Patnaik ()

Working Papers from National Institute of Public Finance and Policy

Abstract: This paper analyses the cyclical nature of fiscal policy in South Asian economies. Drawing on the recent literature, we assess whether these economies have graduated to a counter-cyclical fiscal policy in the recent period. We find that fiscal policy is procyclical in most of the South Asian economies. Our analysis shows that the evidence of graduation to a counter-cyclical fiscal policy is weak for South-Asian economies. Our findings are robust to alternative methods of extracting the cyclical component. This has implications for macro-stabilisation policies in these countries and warrants a rethink of the fiscal policy framework.

Pages: 19
Date: 2019-05
New Economics Papers: this item is included in nep-mac
Note: Working Paper 268, 2019
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Handle: RePEc:npf:wpaper:19/268