Can Statistical Capacity Building Help Reduce Procyclical Fiscal Policy in Developing Countries?
33 Pages Posted: 9 Dec 2016
Date Written: November 2016
Few papers have attempted to assess the role of 'capacity,' especially in the area of macroeconomic statistics. Consequently, we make an attempt to advance this literature through the construction of a 'statistical capacity building index,' and then test its explanatory power on the cyclicality of government spending. Using panel data from 62 developing countries, we find evidence that improvements in this index are associated with less procyclicality of government spending over the period 1990-2012; with the significance of this relationship dependent upon the quality of administrative and technical capacity of budgetary institutions.
Keywords: Statistics, Fiscal policy, Government expenditures, Budgets, Budgeting, Developing countries, Business cycles, Fiscal policy, Procyclicality, Capacity building, Budget institutions, Developing countries.
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