Economic, Political and Institutional Determinants of Budget Deficits Volatility in Selected Asian Countries
AbstractIn the present study the economic, political and institutional sources of budgets deficits are analysed for two regions South Asia and ASEAN countries for the period 1984 to 2010. The results reveal that high income, rising inflation and large budget to GDP ratio are associated with budget instability, where as a strong inertia in budget deficit volatility exists. The exposure of more external shocks make the budget deficit more volatile, however, countries with high population growth have less volatile budget deficits. The results indicate that high level of political stability and democracy and improvement in social and economic condition reduces the budget deficit volatility. High corruption and low institutional quality lead to more fluctuations in the budget deficit. The results suggest that political and institutional factors have a direct impact on fiscal instability beyond the economic reasons to effect fluctuations. The results of the current study leads to important implication that by improving the quality of institutions, creating situations for economic stability and moving towards democratic regimes would ensure more stable fiscal deficits and resultantly positive effect on the long term economic growth.
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Bibliographic InfoArticle provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.
Volume (Year): 50 (2011)
Issue (Month): 4 ()
Budget Deficits Volatility; Per Capita GDP; Openness; Inflation; Political Stability; Institutional Quality; Democracy and Corruption;
Find related papers by JEL classification:
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
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