FISCAL POLICY

Countercyclical Fiscal Policy



Countercyclical Fiscal Policy

This paper surveys fiscal policy in developing countries from the point of view of long-run growth. The first section reviews existing methodologies to estimate the effects of fiscal policy shocks and of systematic fiscal policy, with time series or with cross-sectional methods, and their applicability to developing countries. The second section surveys optimal fiscal policy in developing countries, by considering the role of the intertemporal government budget, and sustainability and solvency.

It also reviews the fuzzy debate on "fiscal space" and "macroeconomic space" - and the usefulness (or lack thereof) of these terms for policy ...