Fiscal Policy During Business Cycles in Developing Countries: The Case of Africa
AbstractFiscal positions of African countries have improved significantly during the past decade. Higher economic growth, better terms of trade, improved donor support notably through debt relief and better control of expenditure contributed to this improvement. But at the same time government revenue and expenditure have become more volatile. The paper explores behaviour of government spending during business cycles. It finds that spending has on average been since 1980 broadly a-cyclical thus neither significantly aggravated nor mitigated cyclical fluctuations. But when comparing the two sub-periods before and after 2000 we find that before 2000 spending was on average (moderately) procyclical. While from 1980 to 2000 in almost two thirds of the 46 countries, which we examined, spending was procyclical this share declined to less than 40 percent after 2000 and in the majority of countries spending was a-cyclical or countercyclical. As more countries escaped from procyclicality Africa’s resilience against external shocks improved. This also helped to better cope with the Great Recession of 2009.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4484.
Date of creation: 2013
Date of revision:
developing countries; Africa; fiscal policy; business cycles;
Other versions of this item:
- Leibfritz, Willi & Rottmann, Horst, 2013. "Fiscal policy during business cycles in developing countries: The case of Africa," OTH im Dialog: Weidener Diskussionspapiere 36, University of Applied Sciences Amberg-Weiden (OTH).
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
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13883, University Library of Munich, Germany.
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- Willi Leibfritz & Gebhard Flaig, 2013. "Economic Growth in Africa: Comparing Recent Improvements with the "lost 1980s and early 1990s" and Estimating New Growth Trends," CESifo Working Paper Series 4215, CESifo Group Munich.
- Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
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