Why Some Countries Can Escape the Fiscal Pro-Cyclicality Trap and Others Cannot?

Aguilera, Santiago Herrera; Kouame, Wilfried Anicet Kouakou; Mandon, Pierre

doi:10.1596/1813-9450-8963

Cited by 5 publications

(3 citation statements)

References 19 publications

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“…In line with the political economy literature, this report finds that the perception of corruption is positively associated with procyclicality, as are social fragmentation and inequality in resource distribution. Similarly, the report shows that the political cycle affects procyclicality, as the procyclical bias increases in electoral years (Herrera, Kouame, and mandon 2019). more rigid spending is associated with a lower degree of procyclicality, but the effect is not symmetric along the business cycle; the dampening effect on the procyclical bias is more pronounced during booms, which can be interpreted as a positive effect (von Hagen and Chen 2019).…”

Section: Rigidities and The Cyclicality Of Fiscal Policymentioning

confidence: 98%

Budget Rigidity in Latin America and the Caribbean: Causes, Consequences, and Policy Implications

Herrera¹,

Olaberría²

2020

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Books in this series are published to communicate the results of Bank research, analysis, and operational experience with the least possible delay. The extent of language editing varies from book to book.This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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Section: Rigidities and The Cyclicality Of Fiscal Policymentioning

confidence: 98%

Budget Rigidity in Latin America and the Caribbean: Causes, Consequences, and Policy Implications

Herrera¹,

Olaberría²

2020

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“…As personal income tax collection is generally low, many developing economies heavily rely on corporate income taxes and royalties or profits of state-owned enterprises in the natural resource-intensive sectors (Ocampo 2017: 69). Pro-cyclical fiscal spending therefore is common among commodity-dependent countries, magnifying both boom and bust periods (Herrera et al 2019). We see this clearly for the cases of Angola and Congo.…”

Section: Commodity Prices and Fiscal Policies As Growth Drivers In Co...mentioning

confidence: 99%

Dependency revisited: commodities, commodity-related capital flows and growth models in emerging economies

Schedelik,

Nölke,

May

et al. 2023

European Journal of Economics and Economic Policies Intervention

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The growth model perspective has provided avenues for bridging comparative and international political economy, mainly regarding the Global Financial Crisis and developments within the eurozone. This article aims to contribute to this endeavor by highlighting the joint effects of capital flows and commodity price swings on growth models in emerging capitalist economies. While the literature on dependent financialization has primarily focused on debt-led growth in the Global South, we spell out the negative implications of commodity-based export-led growth. To this end, we first present a stylized depiction of commodity dependence and provide descriptive statistical evidence of its global prevalence. Subsequently, we trace the co-movement of capital flows to emerging economies and commodity prices. We argue that this ‘commodity–finance nexus’ reinforces the pro-cyclical nature of commodity-based growth, financial volatility, and the vulnerability to global boom–bust cycles. Furthermore, we demonstrate that the conventional method for establishing growth models by calculating the relative contributions to growth is ill-suited to capture the commodity-based export-led growth model of highly commodity-dependent economies. Finally, we identify commodity price movements and fiscal policies as major drivers of growth, with an important role for domestic politics as an intervening variable.

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“…Such fluctuations discourage new investment and undermine human capital through high employment, generating volatile government revenues and terms of trade, and undermining debt sustainability. 7 As discussed in Herrera, Kouame, and Mandon (2019), several other factors such as corruption in political and public services spheres and limited credit to the private sector increase the procyclicality of the public stance and weaken growth acceleration. There is significant evidence from around the world that procyclical fiscal policies deteriorate welfare and poverty outcomes.…”

Section: Fiscal Consolidation Efforts Continue To Yield Positive Resumentioning

confidence: 99%

Central African Republic Economic Update, November 2019

2019

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Recent Economic Developments and Outlooks 1.1 Recent economic developments 1.1.1 A fragile security situation slowed CAR's economic growth in 2018 1.1.2 The CEMAC monetary policy needs to remain on track 1.1.3 Fiscal discipline needs to be maintained 1.1.4 The external position is weak 1.2 Economic outlook and risks 2 Strengthening Domestic Revenue Mobilization in a Fragile State 2.1 Status of the tax system 2.1.1 Tax instruments 2.1.2 Non-tax instruments 2.2 Why is domestic revenue mobilization so low in CAR? 2.2.1 Inefficient tax instruments 2.2.2 Weak tax administration effectiveness 2.2.3 A buoyant and complex informal sector 2.3 How can CAR boost domestic revenue? 2.3.1 Broaden the tax base 2.3.2 Strengthen the tax system 2.3.3 Establish a new social contract 2.3.4 Learn from peers 3 References 4

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Why Some Countries Can Escape the Fiscal Pro-Cyclicality Trap and Others Cannot?

Cited by 5 publications

References 19 publications

Budget Rigidity in Latin America and the Caribbean: Causes, Consequences, and Policy Implications

Budget Rigidity in Latin America and the Caribbean: Causes, Consequences, and Policy Implications

Dependency revisited: commodities, commodity-related capital flows and growth models in emerging economies

Central African Republic Economic Update, November 2019

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