The Impact of Fiscal Consolidations on Growth in Sub-Saharan Africa / Francisco Arizala, Jesus Gonzalez-Garcia, Charalambos Tsangarides, Mustafa Yenice.

Format:

Book

Government document

Author/Creator:

Arizala, Francisco.

Contributor:

Gonzalez-Garcia, Jesus.

Tsangarides, Charalambos.

Yenice, Mustafa.

Series:

IMF Working Papers; Working Paper ; No. 2017/281

IMF Working Papers

Language:

English

Subjects (All):

Budget--Africa, Sub-Saharan.

Budget.

Revenue--Africa, Sub-Saharan.

Revenue.

Expenditures, Public.

Physical Description:

1 online resource (33 pages)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2017.

Summary:

This paper examines the output effects of changes in public expenditure and revenue in sub-Saharan African countries during 1990–2016. Fiscal multipliers in sub-Saharan Africa are somewhat smaller than those in advanced and emerging economies. The effect of changes in fiscal policy on output depends on the composition: cutting public investment has a larger effect on output than cutting public consumption or raising revenue. Episodes of fiscal consolidation have short- and medium-term output effects, but here, too, composition matters: fiscal consolidations based on reducing public investment have the largest effect on output, while fiscal consolidations based on revenue mobilization are less harmful than those based on public investment cuts. These findings suggest that the negative impact on growth can be mitigated through the design of fiscal adjustment and the accompanying policy environment.

Contents:

Cover

Contents

I. Introduction

II. Data and Stylized Facts

A. Data

B. Stylized Facts

III. Empirical Methodology

A. Estimating Fiscal Multipliers

B. Estimating the Effects of Fiscal Consolidations

IV. The Effect of Fiscal Policy on Output

A. The Size of the Fiscal Multiplier

B. Fiscal Multipliers and Country Characteristics

C. Robustness

V. Fiscal Consolidations, Economic Activity, and the Role of Mitigation Policies

A. How Much Does Fiscal Consolidation Hurt?

B. The Role of Policies and Macroeconomic Factors

VI. Conclusions

References

Figures

1. Figure 1: SSA and EMEDEV: Episodes of Commodity Revenue Decline

2. Figure 2: SSA and EMEDEV: Spending-based Fiscal Consolidation Episodes

3. Figure 3. Change in the Overall Fiscal Balance and Components: Spending-based Fiscal Consolidation Episodes

4. Figure 4. SSA and Emerging and Developing Countries: Revenue-based Fiscal Consolidation Episodes

5. Figure 5. SSA: Effect of Fiscal Policy on Output

6. Figure 6. SSA: Fiscal Multipliers during Periods of High and Low Growth

7. Figure 7. SSA: Fiscal Multipliers during Periods of High and Low Governance Quality

8. Figure 8. SSA: Fiscal Multipliers during Periods of High and Low Efficiency of Public Investment

9. Figure 9. SSA: Impact of Spending Based Fiscal Consolidation on Economic Activity

10. Figure 10. SSA: Impact of Investment, Consumption, and Revenue Based Consolidations on Output

11. Figure 11. SSA: Impact of Tax-Based Consolidation on Economic Activity

12. Figure 12. SSA: Impact of Fiscal Consolidations under Different Monetary Conditions

13. Figure 13. SSA: Impact of Fiscal Consolidations in Different Debt Environment.

14. Figure 14. SSA: Impact of Fiscal Consolidations and Role of Exchange Rate Flexibility, International Reserves Buffers, and Openness to Trade

15. Figure 15. Robustness Checks: Spending-based Consolidation

Tables

1. Table 1. Variables and Sources

2. Table 2. Estimated Fiscal Multipliers in the Literature

3. Table 3. Comparison of Fiscal Multipliers.

Notes:

Includes bibliographical references.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

9781484333594

1484333594

9781484333617

1484333616

OCLC:

1020032956