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Fiscal Space and Government-Spending & Tax-Rate Cyclicality Patterns: A Cross-Country Comparison, 1960-2016 / Joshua Aizenman, Yothin Jinjarak, Hien Thi Kim Nguyen, Donghyun Park.
- Format:
- Book
- Author/Creator:
- Aizenman, Joshua.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w25012.
- NBER working paper series no. w25012
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Fiscal Space and Government-Spending & Tax-Rate Cyclicality Patterns
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- This paper compares fiscal cyclicality across advanced and developing countries, geographic regions as well as income levels over 1960-2016 period, then identifies factors that explain countries' government spending and tax-policy cyclicality. Public debt/tax base ratio provides a more robust explanation for government-spending cyclicality than public debt/output ratio but the reverse is true when capital investment is accounted for in government spending. On average, a more indebted (relative to tax base) government spends more in good times and cuts back spending indifferently compared with a low-debt country in bad times. We also find that country's sovereign wealth fund has a countercyclical effect in our estimation. Finally, the analysis depicts a significant economic impact of an enduring interest-rate rise on fiscal space, that is, a 10% increase of public debt/tax base ratio is associated with an upper bound of 5.9% increase in government-spending procyclicality.
- Notes:
- Print version record
- September 2018.
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