The Cyclical and Long-Term Behavior of Government Expenditures in Developing Countries
IMF Working Papers, October 1, 2004
Source details
- Canonical URL
- The Cyclical and Long-Term Behavior of Government Expenditures in Developing Countries
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Bibliographic details
- Authors: Gabriela Inchauste, Bernardin Akitoby, Benedict J. Clements, Sanjeev Gupta
- Published: October 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874433.001
Summary findings
- Scope: analysis of short- and long-term movements of government spending relative to output in 51 countries.
- Main short-term result: the main components of government spending increase with output in about half of the sample countries, with variation across spending categories and countries.
- Long-term result: there is a long-term relationship between government spending and output (in line with "Wagner's law") for the majority of countries for at least one spending aggregate.
- Moderating factors (short term): power dispersion and government size typically dampen the positive response of government spending to output.
- Amplifying factors (short term): output volatility and financial risk contribute to the procyclicality of government spending.
Short-term dynamics
- Procyclicality evidence:
- Main components of government spending increase with output in about half of the 51 countries analyzed.
- Responses vary by spending category and by country.
- Institutional and risk factors:
- Power dispersion and government size: typically dampen the positive response of government spending to output.
- Output volatility and financial risk: contribute to greater procyclicality of government spending.
Long-term relationship
- Wagner’s law consistency:
- For the majority of countries, at least one spending aggregate shows a long-term relationship with output consistent with "Wagner's law."
Data, publication, and metadata
- Authors: Gabriela Inchauste, Bernardin Akitoby, Benedict J. Clements, Sanjeev Gupta
- Date: October 1, 2004
- Pages: 24
- Volume: 2004
- Issue: 202
- Series: Working Paper No. 2004/202
- DOI: https://doi.org/10.5089/9781451874433.001
- Stock No: WPIEA2004202
- ISBN: 9781451874433
- ISSN: 1018-5941
- Subjects and keywords: Capital spending; Current spending; Expenditure; Government consumption; National accounts; Total expenditures; Africa; Business cycles; elasticity of government spending; financial risk; Fiscal policy; GDP ratio; Government consumption expenditure; Wagner’s law; WP
Source: IMF Working Paper — "The Cyclical and Long-Term Behavior of Government Expenditures in Developing Countries" (October 1, 2004).