The Choice of Fiscal Regimes in the World
Fiscal policy regimes are increasingly adopted by governments that aim at contributing to stabilize business cycles and make public finances more resilient to political pressure. This paper presents a comprehensive empirical exploration of the possible explanations of why countries choose fiscal policy regimes. The paper puts together and uses a large world panel dataset for treatment and control country groups, applies five panel-data estimation techniques for discrete-choice dependent variables, and conducts robustness checks for different control groups and time periods. The paper’s evidence shows that the likelihood of having a fiscal regime in place increases significantly and robustly with the government balance, government stability, and GDP per-capita, and declines with dependency ratio and expenditure procyclicality.
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- Arellano, M. & Honore, B., 2000.
"Panel Data Models: Some Recent Developments,"
0016, Centro de Estudios Monetarios Y Financieros-.
- Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
- George Kopits, 2001. "Fiscal Rules; Useful Policy Framework or Unnecessary Ornament?," IMF Working Papers 01/145, International Monetary Fund.
- Arellano, M & Carrasco, R, 1996.
"Binary Choice Panel Data Models with Predetermined Variables,"
9618, Centro de Estudios Monetarios Y Financieros-.
- Arellano, Manuel & Carrasco, Raquel, 2003. "Binary choice panel data models with predetermined variables," Journal of Econometrics, Elsevier, vol. 115(1), pages 125-157, July.
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