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dc.titleWhat Determines the Adoption of Fiscal Rules in Resource-Rich Developing Countries?: An Empirical Investigation
dc.contributor.authorDeyal, Zubin
dc.contributor.authorSmets, Lodewijk
dc.contributor.orgunitCountry Department Caribbean Group
dc.coverageThe Caribbean
dc.date.available2020-03-19T00:00:00
dc.date.issue2020-03-19T00:00:00
dc.description.abstractOver the past three decades, fiscal rules have increasingly been used as a tool to promote fiscal responsibility and macroeconomic stability. In principle, fiscal rules have numerous benefits, especially for resource-rich economies. Many countries, however, still opt to leave fiscal policy unconstrained. This paper investigates the reasons for this by determining the economic, institutional, and political factors which influence the likelihood that a country will adopt a fiscal rule. It focuses on resource-rich countries and accounts for the role of development agencies. Results from a conditional fixed-effects logit model indicate that strong macroeconomic fundamentals and government stability are associated with the adoption of a fiscal rule. Furthermore, the evidence shows that the presence of more development partnersespecially multilateral agenciesincreases the likelihood of adoption, even when controlling for the volume of aid and the presence of an IMF program. Generally, these results are robust to the use of different estimation techniques, an alternative measure for commodity dependence, and a restriction on the estimation sample.
dc.format.extent19
dc.identifier.doihttp://dx.doi.org/10.18235/0002254
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/What_Determines_the_Adoption_of_Fiscal_Rules_in_Resource-Rich_Developing_Countries_An_Empirical_Investigation.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectFiscal Policy
dc.subjectDemocracy
dc.subjectPublic Debt
dc.subjectExchange Rate
dc.subjectEconomic Development
dc.subjectFiscal Rule
dc.subjectGross Domestic Product
dc.subject.jelcodeO30 - Innovation • Research and Development • Technological Change • Intellectual Property Rights: General
dc.subject.jelcodeO11 - Macroeconomic Analyses of Economic Development
dc.subject.jelcodeO23 - Fiscal and Monetary Policy in Development
dc.subject.jelcodeE62 - Fiscal Policy
dc.subject.jelcodeO19 - International Linkages to Development • Role of International Organizations
dc.subject.keywordsFiscal Rules;macroeconomic stability;development assistance;aid effectiveness;resource-rich countries
dc.typeDiscussion Papers
idb.identifier.pubnumberIDB-DP-00754
idb.operationRG-P1734
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