Procyclical Fiscal Policy

Ihori, Toshihiro; Kameda, Keigo

doi:10.1007/978-981-13-2995-1

Cited by 3 publications

(9 citation statements)

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“…Most empirical studies of the cyclicality of fiscal policy use ex-post data. In a recent review of the literature in this area, Ihori and Itaya (2018) summarise a finding of pro-cyclicality arising in most developing countries in the literature on this subject, which their own empirical analysis supports and which they find also arises in some industrialised countries. Those studies have been wide-ranging in the countries covered and in the methodologies used.…”

Section: Literature Reviewmentioning

confidence: 96%

“…1 Projections for real government investment growth are not included in SCPs (nor are growth rates of total government expenditure). Not only are there a priori issues with using tax variables in the assessment of the cyclicality of fiscal policy (Ihori and Itaya, 2018) but data relating to suitable tax rates to use are not readily identifiable in SCPs. Variables such as the government deficit ratio, as already noted, are endogenous to output, while cyclicallyadjusted budget balances raise well-documented issues of measuring output gaps, concerns which are particularly acute for small open economies (Cronin and McCoy, 1999).…”

Section: Datamentioning

confidence: 99%

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The (pro-) cyclicality of government consumption in the EU and official expectations of future output growth: new evidence

Cronin

McQuinn

2020

Int Econ Econ Policy

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Data from member states' Stability and Convergence Programmes from 2011 to 2018 are used to assess the cyclicality of government consumption in the EU after the European Semester took effect. Econometric estimations, which address endogeneity issues, find the intended (ex-ante) fiscal policy to be pro-cyclical in nature. Government consumption is also found to be pro-cyclical ex-post but to a much lesser extent than ex-ante. This appears to be largely owing to a forecasting bias on the part of official forecasters occurring, despite the purported improvements to EU member states' surveillance and forecasting mechanisms that have been put in place in recent years to address such bias.

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Section: Literature Reviewmentioning

confidence: 96%

Section: Datamentioning

confidence: 99%

The (pro-) cyclicality of government consumption in the EU and official expectations of future output growth: new evidence

Cronin

McQuinn

2020

Int Econ Econ Policy

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“…However, budget deficits should be designed as pro-cyclically (Lane, 2003(Lane, : 2663. In this context, the tax smoothing hypothesis also partially accepts that pro-cyclical practices, which have been heavily criticized in the literature, are not just harmful (Ihori and Kameda, 2018). Therefore, public expenditures and revenues may be generated pro-cyclically, relying on the sensitivity of the deterioration in business cycles.…”

Section: Cyclical Movements Of Fiscal Policymentioning

confidence: 99%

“…The authors argued that in 7 of 11 countries, counter-cyclical fiscal policies were implemented, and the degree of institutional quality is related to the implementation of counter-cyclical policies. Ihori and Kameda (2018) examined the cyclical behavior of fiscal policy for 24 OECD and 20 developing countries in the period 1960: Q1-2016: Q4 using the panel data analysis technique. The investigation results indicate that the tendency to apply pro-cyclical policies in developing countries is higher than in OECD member countries.…”

Section: Empirical Literaturementioning

confidence: 99%

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Is Fiscal Policy in Turkey Pro or Counter-Cyclical? Evidence from the ARDL Analysis

SERİN

Ünlükaplan

2022

Eskişehir Osmangazi Üniversitesi Sosyal Bilimler Dergisi

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An essential part of the ongoing normative debate on how to design the cyclical movements of fiscal policy practices argues that counter-cyclical fiscal policies based on the Keynesian view should be preferred to pro-cyclical practices because of their stabilizing effects. In this context, the empirical analysis of the cyclical behavior of fiscal policy is an area that is up to date, first introduced by Gavin and Perotti (1997). The common opinion of empirical studies is that counter-cyclical practices are applied in developed economies; pro-cycle practices are more common in developing and underdeveloped economies. This study examines the cyclical movements of fiscal policy practices in Turkiye from 1990-2020 with the ARDL method. As a result of the study, findings were obtained that Turkiye's fiscal policy practices have a counter-cyclical structure but lose its fiscal space for a maneuver. The robustness tests also support the findings.

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European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries

Štiblárová¹

2022

ekoncas

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This paper empirically verifies recent efforts of EU policymakers and government authorities to apply the European Cohesion Policy (ECP) as a possible counter-cyclical instrument to boost economies in their economic downturns.Compared to limited country-specific studies, we allow for an endogeneity issue between the business cycles and the ECP payments and apply a system GMM estimation for the EU-28 recipient countries sample in the time period 2000 -2018. Even though the overall ECP payments follow a pro-cyclical path, the model estimations for the sub-periods based on individual programming periods reveal a time-varying cyclical character of the ECP. Whereas the observed procyclicality can be mainly contributed to the period 2000 -2006, we find the conditional counter-cyclical effects in 2007 -2013 and 2014 -2018, when a lower price level and obeying the rule of law seem to have an extra counter-cyclical dimension, confirming a rationale of the convergence criteria and the Stability and the Growth Pact.

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Procyclical Fiscal Policy

Cited by 3 publications

References 0 publications

The (pro-) cyclicality of government consumption in the EU and official expectations of future output growth: new evidence

The (pro-) cyclicality of government consumption in the EU and official expectations of future output growth: new evidence

Is Fiscal Policy in Turkey Pro or Counter-Cyclical? Evidence from the ARDL Analysis

European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries

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