When the Cycle Becomes the Trend: The Emerging Market Experience with Fiscal Policy during the Last Commodity Super Cycle

Rashaad Amra (), Marek Hanusch and Charl Jooste

No 8712, Policy Research Working Paper Series from The World Bank

Abstract: Fiscal buffers have shrunk across the world. This paper argues that limited fiscal room in emerging market economies today is partly due to the commodity super cycle of 2000-15. The super cycle created the mirage that economic performance had structurally improved, mistaking a long, commodity-fueled uptick in the business cycle for higher trend growth. This thinking supported fiscal expansions. When the commodity boom ended, it became apparent that countries had saved less than they should have, and that fiscal policy had, perhaps inadvertently, been pro-cyclical. It left countries with depleted fiscal buffers and large budgets when the cycle came to an end, limiting room for fiscal stimulus when needed. The paper illustrates the argument with reference to the South African experience.

Keywords: Macro-Fiscal Policy; Economic Adjustment and Lending; Public Finance Decentralization and Poverty Reduction; Public Sector Economics; Commodity Risk Management; Public Financial Management; Administrative&Civil Service Reform; Public Sector Administrative and Civil Service Reform; De Facto Governments; Democratic Government; Public Sector Administrative&Civil Service Reform; Economic Growth; Economic Theory&Research; Industrial Economics (search for similar items in EconPapers)
Date: 2019-01-18
New Economics Papers: this item is included in nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://documents.worldbank.org/curated/en/355881547823983112/pdf/WPS8712.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:8712

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().