External Shocks and Fiscal Adjustment in Developing Countries: Experiences During 1962-82
30 Pages Posted: 15 Feb 2006
Date Written: July 22, 1987
This paper analyzes factors underlying fiscal developments in 18 developing countries during 1962-82 in relation to developments in their external sectors, which constitute one of their main revenue bases. The analysis focuses on how government expenditure was used as a policy instrument for fiscal adjustment in the face of external shocks and the consequent fiscal imbalances. The analysis indicates that fiscal policy responded to external shocks in a fairly large number of countries. In particular, fiscal policy responses to unexpected shocks were stronger than the responses to anticipated ones.
JEL Classification: 321
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