Macroeconomic textbooks warn that procyclical public spending can amplify economic volatility and cause fiscal stress. However, the latter risks materialize only when governments fail to reduce spending during downturns as much as they increase it during booms. This study investigates asymmetries in the cyclicality of public consumption and finds that emerging markets exhibit “downward rigidity”: they boost spending during upswings but do not effectively...
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INFORMATION
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2024/11/25
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Document de travail de recherche sur les politiques
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WPS10984
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1
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2024/11/25
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Disclosed
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From Fiscal Cyclicality to Fiscal Stress : The Role of Asymmetric Public Consumption Rigidities in Emerging Markets