Macroeconomics of Fiscal Policy in Developing Countries

ANU Working Paper

53 Pages Posted: 24 Feb 2001

See all articles by Raghbendra Jha

Raghbendra Jha

Australian National University (ANU) - Australia South Asia Research Centre (ASARC); Crawford School of Public Policy

Date Written: February 2001

Abstract

This paper considers some aspects of the effects of fiscal policy on macroeconomic adjustment in developing countries. First, the paper reviews the notion of the fiscal deficit in the particular context of developing countries. It then spells out the conditions under which the internal and external debts are sustainable and points out the role of the "twin deficits". The paper then presents some evidence on the sustainability of the internal and external deficits in the context of some developing countries. Finally the paper develops the theme of endogeneity of money supply to fiscal policy and international capital flows and points out the difficulties faced by stabilization policy under these conditions.

Keywords: Fiscal Deficit, Current Account Deficit, Endogeneity of Money Supply

JEL Classification: E51, E63, H62, O11, O18

Suggested Citation

Jha, Raghbendra, Macroeconomics of Fiscal Policy in Developing Countries (February 2001). ANU Working Paper, Available at SSRN: https://ssrn.com/abstract=260691 or http://dx.doi.org/10.2139/ssrn.260691

Raghbendra Jha (Contact Author)

Australian National University (ANU) - Australia South Asia Research Centre (ASARC) ( email )

Canberra, Australian Capital Territory 0200
Australia
+61 2 6125 2683 (Phone)
+61 2 6125 0443 (Fax)

HOME PAGE: http://crawford.anu.edu.au/crawford_people/content/staff/acde/rjha.php

Crawford School of Public Policy

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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