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Fiscal Volatility, Financial Crises and Growth

Author

Listed:
  • António Afonso
  • João Tovar Jalles

Abstract

We use a panel of developed and emerging countries for the period 1970-2008 to assess how fiscal policy volatility and financial crises affect growth. We find that economic growth is lower in the presence of more volatile fiscal policy. Moreover, with a financial crisis government spending is stickier than revenue.

Suggested Citation

  • António Afonso & João Tovar Jalles, 2012. "Fiscal Volatility, Financial Crises and Growth," Working Papers Department of Economics 2012/06, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp062012
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    File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp062012.pdf
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    References listed on IDEAS

    as
    1. Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-279, June.
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    Citations

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    Cited by:

    1. Antonio Afonso & Jose Alves, 2015. "The Role of Government Debt in Economic Growth," Hacienda Pública Española, IEF, pages 9-26.
    2. Panagodage Janaka Sampath Fernando & Hasthimuni Nadeeka De Silva & Athula Naranpanawa & Chandika Gunasinghe, 2017. "Revisiting the debt-growth nexus: Empirical evidence from Sri Lanka," Discussion Papers in Economics economics:201706, Griffith University, Department of Accounting, Finance and Economics.
    3. Afonso, António & Jalles, João Tovar, 2013. "Growth and productivity: The role of government debt," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 384-407.
    4. Eugenia-Ramona Mara, 2012. "Determinants of fiscal budget volatility in old versus new EU member states," Working Papers Department of Economics 2012/31, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. Adnan Efendic & Naida Trkic-Izmirlija, 2013. "Effects of the global economic crisis and public spending on income distribution in Bosnia and Herzegovina," wiiw Balkan Observatory Working Papers 108, The Vienna Institute for International Economic Studies, wiiw.
    6. Zuzana Machová & Igor Kotlán, 2015. "Právní jistota - možný problém daňové politiky vyspělých zemí?
      [Legal Certainty - Possible Problem of Tax Policy in Developed Countries?]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(7), pages 833-846.

    More about this item

    Keywords

    growth; fiscal volatility; crises; panel analysis.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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