Abstract

During the past decade, the developing countries have been subjected to various exogenous shocks that have made the pursuit of sound economic policy, and particularly sound fiscal policy, very difficult. In this paper, I discuss the factors associated with these exogenous shocks; the impact of these shocks on fiscal variables; and some of the policy responses by countries. “Exogenous shocks” are defined as uncontrollable external events that have substantial effects on a country’s income level.