Deep Roots of Fiscal Behavior
This paper investigates the determinants of fiscal policy behavior and its time-varying volatility, using panel data for a broad set of advanced and emerging market economies during the period 1990–2012. The empirical results show that discretionary fiscal policy is influenced by policy inertia,...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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University of Warsaw
2014-05-01
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| Series: | Journal of Banking and Financial Economics |
| Subjects: | |
| Online Access: | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1095&context=jbfe |
| _version_ | 1826904873176662016 |
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| author | Serhan Cevik Katerina Teksoz |
| author_facet | Serhan Cevik Katerina Teksoz |
| author_sort | Serhan Cevik |
| collection | DOAJ |
| description | This paper investigates the determinants of fiscal policy behavior and its time-varying volatility,
using panel data for a broad set of advanced and emerging market economies during the period
1990–2012. The empirical results show that discretionary fiscal policy is influenced by policy
inertia, the level of public debt, and the output gap in both advanced and emerging-market
economies. In addition, the paper finds that macro-financial factors (such as real exchange rate,
financial development, interest rates, asset prices, and natural resource rents) and demographic
and institutional factors (such as the old-age dependency ratio, the quality of institutions, and
policy anchors such as fiscal rules and IMF-supported stabilization programs) tend to have
a significant effect on fiscal policy behavior. The results also indicate that higher government debt
leads to more volatile fiscal behavior, while fiscal rules and higher institutional quality reduce the
volatility of fiscal policy over time. |
| first_indexed | 2024-04-24T14:30:45Z |
| format | Article |
| id | doaj.art-1558391f95d543219e2058ba6ad56896 |
| institution | Directory Open Access Journal |
| issn | 2353-6845 |
| language | English |
| last_indexed | 2025-02-17T08:18:55Z |
| publishDate | 2014-05-01 |
| publisher | University of Warsaw |
| record_format | Article |
| series | Journal of Banking and Financial Economics |
| spelling | doaj.art-1558391f95d543219e2058ba6ad568962025-01-02T23:16:32ZengUniversity of WarsawJournal of Banking and Financial Economics2353-68452014-05-0120142(2)53310.7172/2353-6845.jbfe.2014.2.1Deep Roots of Fiscal BehaviorSerhan Cevik0Katerina Teksoz1International Monetary Fund, U.S.A.Columbia University, USAThis paper investigates the determinants of fiscal policy behavior and its time-varying volatility, using panel data for a broad set of advanced and emerging market economies during the period 1990–2012. The empirical results show that discretionary fiscal policy is influenced by policy inertia, the level of public debt, and the output gap in both advanced and emerging-market economies. In addition, the paper finds that macro-financial factors (such as real exchange rate, financial development, interest rates, asset prices, and natural resource rents) and demographic and institutional factors (such as the old-age dependency ratio, the quality of institutions, and policy anchors such as fiscal rules and IMF-supported stabilization programs) tend to have a significant effect on fiscal policy behavior. The results also indicate that higher government debt leads to more volatile fiscal behavior, while fiscal rules and higher institutional quality reduce the volatility of fiscal policy over time.https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1095&context=jbfefiscal policyfiscal reaction functionsfiscal policy volatility |
| spellingShingle | Serhan Cevik Katerina Teksoz Deep Roots of Fiscal Behavior Journal of Banking and Financial Economics fiscal policy fiscal reaction functions fiscal policy volatility |
| title | Deep Roots of Fiscal Behavior |
| title_full | Deep Roots of Fiscal Behavior |
| title_fullStr | Deep Roots of Fiscal Behavior |
| title_full_unstemmed | Deep Roots of Fiscal Behavior |
| title_short | Deep Roots of Fiscal Behavior |
| title_sort | deep roots of fiscal behavior |
| topic | fiscal policy fiscal reaction functions fiscal policy volatility |
| url | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1095&context=jbfe |
| work_keys_str_mv | AT serhancevik deeprootsoffiscalbehavior AT katerinateksoz deeprootsoffiscalbehavior |