Fiscal Spending and Economic Performance : Some Stylized Facts

Fiscal Spending and Economic Performance : Some Stylized Facts

This paper complements the cross-country approach by examining the correlates of growth acceleration in per capita gross domestic product around "significant" public expenditure episodes by reorganizing the data around turning points, or...

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Bibliographic Details
Main Authors:	Carrère, Céline, de Melo, Jaime
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCRUAL BASIS AMERICAN ECONOMIC REVIEW ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK POLICY BASELINE DATA BUDGET DEFICIT BUSINESS CYCLE CAPITA GROWTH CAPITAL ASSETS CAPITAL EXPENDITURE CAPITAL EXPENDITURES CAPITAL FLOWS CAPITAL INFLOWS CASE STUDIES CASH BASIS CASH INFLOW CASH OUTFLOW CASH PAYMENTS CD CENTRAL GOVERNMENT CENTRAL GOVERNMENT BUDGET CENTRAL GOVERNMENT DEFICIT CHANGES IN EXPENDITURES CHECKS CIVIL DEFENSE COMMUNITY SERVICES COMPARISON GROUP COUNTRY CASE CREDIT CONSTRAINTS CURRENCY DATA AVAILABILITY DATA REQUIREMENTS DEBT DEFENSE EXPENDITURES DEFICIT LEVEL DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DUMMY VARIABLE DYNAMIC PANEL ECONOMIC ACTIVITY ECONOMIC AFFAIRS ECONOMIC CLASSIFICATION ECONOMIC GROWTH ECONOMIC MANAGEMENT ECONOMIC PERFORMANCE ECONOMIC REFORM EDUCATION EXPENDITURES ELASTICITIES EQUIPMENT ESTIMATION RESULTS EXPENDITURE CATEGORIES EXPENDITURE COMPOSITION EXPENDITURE GROWTH EXPENDITURE REFORM EXPORT SECTOR EXTERNAL BORROWING EXTERNAL CONDITIONS EXTERNAL SHOCKS FINANCIAL INSTRUMENT FINANCIAL MARKETS FINANCIAL STATISTICS FISCAL AFFAIRS FISCAL DATA FISCAL DEFICIT FISCAL DEFICITS FISCAL EPISODES FISCAL EVENTS FISCAL EXPENDITURE FISCAL EXPENDITURES FISCAL PERFORMANCE FISCAL POLICY FISCAL REFORM FISCAL REFORMS FISCAL SIDE FISCAL STANCE FISCAL SUSTAINABILITY FISCAL VARIABLES FIXED ASSETS FIXED CAPITAL FLUCTUATIONS FOREIGN ECONOMIC AID FOREIGN MILITARY AID FUNGIBILITY GOVERNMENT BUDGET GOVERNMENT BUDGET CONSTRAINT GOVERNMENT EXPENDITURES GOVERNMENT OUTLAYS GOVERNMENT REVENUE GOVERNMENT SPENDING GROSS DOMESTIC PRODUCT GROWTH EFFECTS GROWTH EPISODE GROWTH OBJECTIVE GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH VOLATILITY HEALTH EXPENDITURES HIGH GROWTH HIGH INCOME HIGH INCOME COUNTRIES HOSPITAL SERVICES INCOME INCOME DISTRIBUTION INCREASE IN EXPENDITURES INFLATION INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE PROJECTS INTANGIBLE INTANGIBLE ASSETS INTEREST PAYMENT INTEREST PAYMENTS INTERNATIONAL BANK INTERNATIONAL COMPARISONS INTERNATIONAL DEVELOPMENT INTERNATIONAL FINANCIAL MARKETS LEVEL OF INCOME LEVEL OF INDEBTEDNESS LIBERALIZATION LOAN LONG-RUN GROWTH LOW INCOME LOW INCOME COUNTRIES LOW-INCOME COUNTRIES MACROECONOMIC ENVIRONMENT MACROECONOMIC POLICY MACROECONOMIC STABILITY MACROECONOMICS MARGINAL COEFFICIENTS MEDICAL PRODUCTS MIDDLE EAST MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MILITARY DEFENSE MONETARY ECONOMICS NORMAL DISTRIBUTION OUTCOME INDICATORS OUTPUT GROWTH PER CAPITA GROWTH PERFORMANCE OF GOVERNMENT POLICY DISCUSSION POLICY PACKAGE POLICY RESEARCH POLITICIANS POOL OF FUNDS POOR COUNTRIES POSITIVE COEFFICIENT POVERTY REDUCTION PRICE VALUES PRIMARY DEFICIT PRIMARY SPENDING PUBLIC DEBT PUBLIC DEBT TRANSACTIONS PUBLIC DEFICIT PUBLIC DEFICITS PUBLIC ECONOMICS PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC HEALTH PUBLIC HEALTH SERVICES PUBLIC INVESTMENT PUBLIC SECTOR PUBLIC SECTOR EXPENDITURES PUBLIC SERVICES PUBLIC SPENDING RAPID GROWTH REGRESSION ANALYSIS RETURNS SOCIAL BENEFITS SOCIAL INFRASTRUCTURE SOCIAL PROTECTION SOCIAL SECURITY STANDARD ERRORS STOCKS STREET LIGHTING STRUCTURAL BREAK SUB-SAHARAN AFRICA TAX TAX REVENUE TOTAL EXPENDITURE TOTAL PUBLIC EXPENDITURE TRADE LIBERALIZATION TRADE POLICY TRADE SHOCKS UNCERTAINTY VOLATILITY
Online Access:	http://documents.worldbank.org/curated/en/2007/12/8890175/fiscal-spending-economic-performance-some-stylized-facts http://hdl.handle.net/10986/7517

Description
Summary:	This paper complements the cross-country approach by examining the correlates of growth acceleration in per capita gross domestic product around "significant" public expenditure episodes by reorganizing the data around turning points, or events. The authors define a growth event as an increase in average per capita growth of at least 2 percentage points sustained for 5 years. A fiscal event is an increase in the annual growth rate of primary fiscal expenditure of approximately 1 percentage point sustained for 5 years and not accompanied by an aggravation of the fiscal deficit beyond 2 percent of gross domestic product. These definitions of events are applied to a database of 140 countries (118 developing countries) for 1972-2005. After controlling for the growth-inducing effects of positive terms-of-trade shocks and of trade liberalization reform, probit estimates indicate that a growth event is more likely to occur in a developing country when surrounded by a fiscal event. Moreover, the probability of occurrence of a growth event in the years following a fiscal event is greater the lower is the associated fiscal deficit, confirming that success of a growth-oriented fiscal expenditure reform hinges on a stabilized macroeconomic environment (through a limited primary fiscal deficit).

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