Was this Time Different? Fiscal Policy in Commodity Republics

By Luis Felipe Céspedes, Andrés Velasco. 2011

163 citations recorded by the source corpus.

We revisit the issue of fiscal procyclicality in commodity-rich nations–commodity republics in the nomenclature of this paper. Since commodity prices are plausibly a main driver of fiscal policy outcomes in these countries, we focus on the behavior of fiscal variables across the commodity cycle, in contrast to behavior across the output cycle, which has been the main focus of earlier research on fiscal procyclicality. We present evidence of reduced fiscal policy procyclicality in a number of countries. Our empirical results suggest that improvements in institutional quality have led to a more countercyclical fiscal policy stance in a number of countries. The presence of fiscal rules also seems to have made a difference: countries that use them displayed a larger shift toward fiscal counter-cyclicality between the two episodes.

Subfields: Demography, Information Systems, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/da4a542617156cf8fea41b69495db8628f8f257b

Citations in the corpus

• Commodity Booms and Busts in Emerging Economies (2017, unknown): “Our approach here is to embed the relation between rt − r∗ and p̃t in a reduced-form fashion, similar to Shousha (2016) and Fernández et al. (2015), who also document further empirical evidence in line with our findings. While we do not provide a complete formal rationalization of the relationship a”
• Sharing a Ride on the Commodities Roller Coaster: Common Factors in Business Cycles of Emerging Economies (2015, unknown): “49Further empirical evidence for a larger number of countries against the hypothesis that the reaction of government spending in a commodity-exporting economy amplifies the effect of commodity prices on the business cycles is presented Cespedes and Velasco (2013).”