Growth, Governance, and Fiscal Policy Transmission Channels in Low-Income Countries
By N. Kojo, Arye L. Hillman, E. Baldacci. Social Science Research Network, 2003
111 citations recorded by the source corpus.
Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries. In low-income countries, governance and also other considerations suggest that the primary channel is factor productivity. Empirical results reported in this paper confirm this expectation: in low-income countries, factor productivity is some four times more effective than investment as a channel for increasing growth through fiscal policy. Although the private investment response to fiscal contraction may be minor, high-deficit, low-income countries can nonetheless benefit from a reduction in unsustainable fiscal deficits because of governance-related factor productivity responses that increase growth.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/6de2c59ad17986102244678663493cb6e0962338
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In Economics and Econometrics
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Citations in the corpus
- Tax-spending policies and economic growth: Theoretical predictions and evidence from the OECD (2007, background): “A positive effect of the share of productive expenditure has also been obtained (although in different specifications) by e.g., Easterly and Rebelo (1993), Devarajan et al. (1996), Kneller et al. (1999) and Baldacci et al. (2004).”
- Corruption and growth: The role of governance, public spending, and economic development (2014, background): “1 For example, see inter alia Leff (1964), Huntington (1968), Liu (1985, 1996), Fisman and Svensson (2007), Pellegrini and Gerlagh (2004), Ali and Isse (2003), Tanzi and Davoodi (2000), Tanzi and Davoodi (1998), Bardhan (1997), Mauro (1995), Aidt (2003), Abed and Gupta (2002).”
- Corruption, Institutions, and Economic Development (2009, background): “This literature shows that (perceived) corruption is negatively related to investment (Mauro, 1995); that it distorts the portfolio of public spending towards less productive activities (Mauro, 1998; Tanzi and Davoodi, 1998) or it creates ine¢ ciently large public sectors where resources that should”
- Public Debt and Growth (2010, unknown): “The fiscal deficit is included to take into account the finding that fiscal deficits are negatively associated with longer-run growth (see Fischer, 1993 and Baldacci et al. 2004).”