The role of institutional quality on the effects of fiscal stimulus

Arbeitspapier

This paper provides evidence on the effect of fiscal stimulus on economic activity in countries with different degrees of institutional quality. The identification strategy makes use of data on military expenditure to instrument government consumption using local lineal projections as presented in Jordà (2005 ). Based on a panel of 113 countries during the period 1988-2017 , the analysis finds evidence that an increment of 1 percent in government consumption yields a sizable, persistent, and stable increase in economic activity of 0.9 percent in countries with higher institutional quality. In contrast, for countries with lower institutional quality, the effect is smaller (0.4 percent) and more short-lived

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IDB Working Paper Series ; No. IDB-WP-01113

Classification and Topics

• Classification: Wirtschaft ; Institutions and the Macroeconomy ; Business Fluctuations; Cycles ; Fiscal Policy
• Subject: fiscal policy ; economic activity ; institutional quality

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Avellán, Leopoldo ; Galindo Andrade, Arturo José ; León-Díaz, John
• Event: Veröffentlichung
• (who): Inter-American Development Bank (IDB)
• (where): Washington, DC
• (when): 2020

Further information

• DOI: doi:10.18235/0002316
• Handle: http://hdl.handle.net/10419/234696
• Last update: 10.03.2025, 11:43 AM CET