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Fiscal Stimulus, Agricultural Growth and Poverty in Asia

Author

Listed:
  • Raghav Gaiha

    (Faculty of Management Studies, University of Delhi, India)

  • Katsushi S. Imai

    (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan))

  • Ganesh Thapa

    (International Fund for Agricultural Development, Italy)

  • Woojin Kang

    (Economics, School of Social Sciences, University of Manchester, UK)

Abstract

Recent debates on a sustainable recovery of the global economy have tended to overemphasise the "savings glut" hypothesis and the unavoidable imperative of higher consumption in China and other emerging Asian countries. That oversaving and not underinvestment is coming in the way of a quicker and more durable recovery is not just simplistic but misleading from a medium- term growth perspective for emerging Asian countries and other developing countries in this region. Drawing upon country panel data for developing countries and a sub-sample of Asian countries during the period 1991 to 2007, the present study makes a case for a bold and coordinated fiscal stimulus, directed to stimulating agricultural and overall growth, and mitigation of poverty and hunger. Our simulations further suggest that poverty reduction is likely to be larger if the fiscal stimulus is directed to social spending in health and education sectors. Indeed, if our simulations of fiscal impacts have any validity, the dire predictions of millions getting trapped in poverty and hunger may turn out to be exaggerated. The prospects of a strong recovery led by fiscal stimulus are thus real and achievable.

Suggested Citation

  • Raghav Gaiha & Katsushi S. Imai & Ganesh Thapa & Woojin Kang, 2010. "Fiscal Stimulus, Agricultural Growth and Poverty in Asia," Discussion Paper Series DP2010-15, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2010-15
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2010-15.pdf
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    Keywords

    Government Expenditure; Fiscal Policy; Economic Growth; Agricultural Growth; Poverty; Asia;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple 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

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