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dc.contributor.authorHalland, Håvarden_US
dc.contributor.authorBleaney, Michaelen_US
dc.description.abstractThe procyclicality of fiscal policy that is prevalent in developing countries and emerging markets is well known. Its explanation is less clear. Recently, social inequality and the combination of corruption and democracy have been suggested as alternatives to the traditional explanation of these countries' exposure to boom-bust cycles in international credit markets. Differences in methodological approach are also partly responsible for diverging empirical results. In this paper, competing hypotheses are tested on a comprehensive set of measures of the cyclicality of fiscal policy. The evidence for corruption and democracy is stronger than for social inequality or net foreign debt, but the interpretation of this result is less obvious, since the index of corruption is closely correlated with poor credit ratings. In OECD countries, by contrast, the cyclicality of fiscal policy largely reflects the strength of automatic stabilizers.en_US
dc.publisher|aCentre for Research in Economic Development and International Trade, Univ. of Nottingham |cNottinghamen_US
dc.relation.ispartofseries|aCREDIT Research Paper |x11/09en_US
dc.subject.keywordfiscal cyclicalityen_US
dc.subject.keywordfiscal policyen_US
dc.subject.keywordbusiness cyclesen_US
dc.subject.keywordfiscal spaceen_US
dc.subject.keywordforeign debten_US
dc.subject.keywordincome inequalityen_US
dc.titleExplaining the procyclicality of fiscal policy in developing countriesen_US
dc.typeWorking Paperen_US

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