Expenditure Composition, Fiscal Adjustment, and Growth in Low-Income Countries

By Benedict Clements, S. Gupta, E. Baldacci, Carlos Mulas-Granados. Social Science Research Network, 2002

113 citations recorded by the source corpus.

This paper assesses the effects of expenditure composition as well as fiscal adjustment on economic growth in a sample of 39 low-income countries during the 1990s. The paper finds that strong budgetary positions and fiscal consolidation are generally associated with higher economic growth in both the short and long terms. The composition of public outlays also matters: Countries where spending is concentrated on wages tend to have lower growth, while those that allocate higher shares to capital and nonwage goods and services enjoy faster output expansion. Expenditure composition, along with the size of the fiscal consolidation and initial fiscal conditions, affects the sustainability of adjustment. Initial fiscal conditions also have a bearing on the nexus between fiscal deficits and growth.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/f9dbd69640df798036182458f207d044213548cb

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1. Aynur Alptekin
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Citations in the corpus

• Military expenditure and economic growth: A meta-analysis (2012, background): “In effect, the impact of disaggregated government spending on growth is commonly studied, which includes milexp, see Aschauer (1989), Easterly and Rebelo (1993), Devarajan et al. (1996), Mulas-Granados et al. (2002), Bose et al. (2007).”
• What Promotes Fiscal Consolidation: OECD Country Experiences (2007, unknown): “This approach has been followed by Baldacci et al. (2004).”