Description |
1 online resource : illustrations |
Series |
SAGE Business cases |
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SAGE Business cases
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Summary |
Fiscal policy is often procyclical in many developing countries. In addition to borrowing constraints and political distortions, the possibility of sovereign default and the associated risk premium in bad times play an important role in this procyclical behavior for countries with a high debt level. Self-insurance by reducing debt and accumulating reserves could increase the scope for countercyclical fiscal policy in response to the global slowdown. Developing countries with adequate international reserves and low debt level are more likely to conduct countercyclical policy because they can mitigate the concern about default risk, and have the higher credit rating and the lower risk premium on external financing. The finding is consistent with recent empirical evidence that developing countries with more countercyclical fiscal policies have higher international reserve holdings |
Notes |
Originally Published InLi, W. (2022). Cyclical Behavior of Fiscal Policy: Historical Overview in Emerging Economies. Beijing, China: Beihang University, School of Economics and Management |
Bibliography |
Includes bibliographical references and index |
Notes |
Description based on XML content |
Subject |
Fiscal policy -- Developing countries
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Fiscal policy
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Developing countries
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Form |
Electronic book
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ISBN |
9781529606027 |
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1529606020 |
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