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Short- and Long-Run Fiscal Elasticities: International Evidence

Kai Liu and Marcos Poplawski-Ribeiro ()

MPRA Paper from University Library of Munich, Germany

Abstract: Using dynamic heterogeneous panel data models, this paper estimates short- and long-run fiscal elasticities with respect to various cyclical factors for more than 90 countries. We find the terms of trade are significant in explaining primary fiscal revenues. Moreover, revenue elasticities with respect to real GDP on average are larger than one in the short-run and bigger in developing countries than in advanced economies both, in the short- and long-run. The analysis highlights the importance of considering short- and long-run elasticities with respect to other effects than the output gap, particularly terms of trade, when computing structural balances.

Keywords: fiscal elasticities; structural fiscal balances; dynamic heterogeneous panel data model; business cycle (search for similar items in EconPapers)
JEL-codes: C33 E32 E62 H62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2015-08-04
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