Challenges of Fiscal Policy in Emerging and Developing Economies

Huidrom, Raju ; Kose, M. Ayhan ; Ohnsorge, Franziska L.

World Bank, Washington, DC

关键词: CURRENCY MISMATCHES;    MONETARY POLICY;    DEFICIT;    WITHDRAWAL;    DEBT ACCUMULATION;   

DOI  :  10.1596/1813-9450-7725
RP-ID  :  WPS7725

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper presents a systematicanalysis of the availability and use of fiscal space inemerging and developing economies. These economies builtfiscal space in the run-up to the Great Recession of2008-09, which was then used for stimulus. This reflects amore general trend over the past three decades, whereavailability of fiscal space has been associated withincreasingly countercyclical (or less procyclical) fiscalpolicy. However, fiscal space has shrunk since the GreatRecession and has not returned to pre-crisis levels.Emerging and developing economies face downside risks togrowth and prospects of rising financing costs. In the eventthat these cause a sharp cyclical slowdown, policy makersmay need to employ fiscal policy as a possible tool forstimulus. An important prerequisite for fiscal policy to beeffective is that these economies have the necessary fiscalspace to employ countercyclical policies. Over themedium-term, credible and well-designed institutionalarrangements, such as fiscal rules, stabilization funds, andmedium-term expenditure frameworks, can help build fiscalspace and strengthen policy outcomes.