Fiscal Stabilization and Growth : Evidence from Industry-level Data for Advanced and Developing Economies / Sangyup Choi, Davide Furceri, João Tovar Jalles.

Format:

Book

Government document

Author/Creator:

Choi, Sangyup.

Contributor:

Furceri, Davide.

Jalles, João Tovar.

International Monetary Fund, issuing body.

Series:

IMF Working Papers; Working Paper ; No. 2017/198

IMF Working Papers

Language:

English

Subjects (All):

Fiscal policy--Developing countries.

Fiscal policy.

Economic stabilization--Developing countries.

Economic stabilization.

Physical Description:

1 online resource (49 pages)

Edition:

1st ed.

Place of Publication:

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

Summary:

Medium-term growth can be enhanced by fiscal stabilization. However, to date, no systematic effort has been made to study the specific channels through which fiscal stabilization affects growth. This paper examines the effect of fiscal stabilization on industrial growth and how this effect depends on different technological characteristics. It does so by applying a difference-in-difference approach to an unbalanced panel of 22 manufacturing industries for 55 advanced and developing economies over the period 1970-2014. The results suggest that fiscal stabilization fosters growth in industries with: i) higher external financial dependence and lower asset fixity; ii) higher degree of labor intensity; iii) higher investment lumpiness and relationship-specific input usage. These effects tend to be larger during economic recessions. The results are robust to different measures of fiscal stabilization and the inclusion of various interactions between a broad set of macroeconomic variables and production technologies.

Contents:

Cover

Contents

I. Introduction

II. Fiscal Stabilization and Growth: Channels

III. Data

A. Fiscal Stabilization

B. UNIDO data

C. Industry-level characteristics

IV. Methodology

V. Results

A. Baseline results

B. Robustness checks

C. Decomposition of industry growth

D. Recessions vs. expansions

E. Robust channels

VI. Conclusion

References

List of Figures

Figure 1: Fiscal stabilization over time, all countries, 1994-2016

Figure 2: Fiscal stabilization over time, within sample inter-quartile ranges

Figure 3: Fiscal stabilization and output volatility: Evidence across countries

Figure 4: Fiscal stabilization and output volatility: Evidence over time

List of Tables

Table 1: Industry-specific characteristics

Table 2: Correlation matrix of industry-specific characteristics

Table 3: Country coverage

Table 4: The effect of fiscal stabilization on industry growth: Value added

Table 5: The effect of fiscal stabilization on industry growth: Theories vs. findings

Table 6: The effect of fiscal stabilization on industry growth: Value added (lagged specification)

Table 7: The effect of fiscal stabilization on industry growth: Gross output

Table 8: The effect of fiscal stabilization on industry growth: WLS

Table 9: The effect of fiscal stabilization on industry growth: Alternative measures of fiscal stabilization

Table 10: The effect of fiscal stabilization on industry growth: Omitted variable bias

Table 11: The effect of fiscal stabilization on industry growth: Labor, capital. productivity

Table 12: The effect of fiscal stabilization on industry growth: Recession vs. expansions

Table 13: The effect of fiscal stabilization on industry growth: Horse race

Appendix.

Notes:

Includes bibliographical references.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

9781484318508

1484318501

9781484318560

1484318560

OCLC:

1024269771