New Evidence on Fiscal Adjustment and Growth in Transition Economies

Abstract

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper analyzes the relationship between fiscal adjustment and real GDP growth in a panel of 26 transition economies during 1992-2001. Unlike most previous studies using crosscountry regressions, the paper finds a positive and statistically significant relationship between fiscal adjustment and growth that is robust to different model specifications and estimation methods. The paper also presents country experiences to delve deeper into the mechanisms that may underlie this statistical relationship.

Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States

“…36 See, for example, Rzońca and Ciżkowicz (2005) or Horváth et al (2006). 37 See, for example, Segura-Ubiergo, Simone and Gupta (2006) or Neicheva (2007). 38 See, for example, Purfield (2003).…”

How Can Public Spending Help You Grow? An Empirical Analysis for Developing Countries

“…Segura‐Ubiergo et al . () present a positive impact of fiscal adjustment on growth in transition economies. Wahab () and Colombier (), focusing on OECD countries, and Ramirez (), Ang (), and Colombier (), studying the case of Mexico, Malaysia, and Switzerland, respectively, all support the significance of public capital expenditure, especially infrastructure, for growth.…”

“…Baldacci et al (2008) indicate that, with explicit control for governance, and incorporation of nonlinearity, both education and health spending support higher growth in developing countries. Segura-Ubiergo et al (2009) present a positive impact of fiscal adjustment on growth in transition economies. Wahab (2004) and Colombier (2009), focusing on OECD countries, and Ramirez (2004), Ang (2009), andColombier (2011), studying the case of Mexico, Malaysia, and Switzerland, respectively, all support the significance of public capital expenditure, especially infrastructure, for growth.…”

Política Fiscal, Expectativas Y Transición Dinámica en El Modelo Simple De Crecimiento Endógeno

“…Easterley y Rebelo (1992) discuten la dificultad de aislar el efecto de las tasas impositivas sobre el crecimiento. Algunos estudios empíricos favorables a la relación de las variables fiscales con el crecimiento son los de Alper y Cakici (2009), Afonso y Furceri (2010), Bhattariai (2010) y Segura- Ubiergo et al (2010). Trabajos menos favorables a la relación de largo plazo entre las variables fiscales y el crecimiento son los de Kaliva y Tunaru (2007) y Colombier (2009).…”