I Macroeconomic Policy in Developing Countries
Author:
Mr. Sanjeev Gupta
Search for other papers by Mr. Sanjeev Gupta in
Current site
Google Scholar Close
Language:
English
Print Publication Date:
17 Sep 2004
Keywords:
BOOK; country; user payment; per capita income; francophone country; recipient country; exchange rate; hazard function; Health care spending; Africa; Western Hemisphere; Sub-Saharan Africa; Global; Asia and Pacific

Abstract

A large body of empirical research supports the notion that healthy budgetary balances are, over the long run, good for growth (Easterly, Rodriguez, and Schmidt-Hebbel, 1994). The effect of fiscal consolidation on growth in the short run, however, remains open to question as a number of studies—largely for industrial countries—have drawn the conclusion that under some circumstances fiscal contractions can stimulate growth.1 A central theme in these works is that the composition of fiscal adjustment plays a key role in determining whether fiscal contractions lead to higher growth and are also sustainable over time. These studies show that improving fiscal positions through the rationalization of the government wage bill and public transfers, rather than increasing revenues and cutting public investment, can foster higher growth even in the short run.

  • Collapse
  • Expand
Cover Helping Countries Develop
Helping Countries Develop
The Role of Fiscal Policy
ISBN:
9781589063181
Publication Date:
17 Sep 2004
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063181.071
Pages:
540
Front Matter
1 Fiscal Policy for Economic Development: An Overview
II Public Spending and the Millennium Development Goals
III Revenues and Growth
IV. Fiscal Policy and Aid
V. Special Topics

  • Abed, G.T., Ebrill, L., Gupta, S., Clements, B., McMorran, R., Pellechio, A., Schiff, J., Verhoeven, M., 1998. Fiscal reforms in low-income countries: experience under IMF-supported programs. IMF Occasional Paper 160 (International Monetary Fund, Washington).

    • Search Google Scholar
    • Export Citation

  • Adam, C.S., Bevan, D.L., 2000. Fiscal policy design in low-income countries. Paper prepared for UNU/WIDER research project on New Fiscal Policies for Poverty Reduction and Growth (unpublished, 11).

    • Search Google Scholar
    • Export Citation

  • Alesina, A., Ardagna, S., 1998. Tales of fiscal adjustment. Economic Policy: A European Forum, 27, 487–546.

  • Alesina, A., Ardagna, S., Perotti, R., Schiantarelli, F., 2002. Fiscal policy, profits, and investment. American Economic Review, 92, 571–589

    • Search Google Scholar
    • Export Citation

  • Alesina, A., Perotti, R., 1995. Fiscal expansion and fiscal adjustments in OECD countries. Economic Policy, 21, 205–248.

  • Alesina, A., Perotti, R., 1996. Fiscal adjustments in OECD countries: composition and macroeconomic effects. IMF Working Paper 96/70.

  • Alesina, A., Perotti, R., Tavares, J., 1998. The political economy of fiscal adjustments. Brookings Papers on Economic Activity, 1, 197–248. Brookings Institution.

    • Search Google Scholar
    • Export Citation

  • Arellano, M., Bond, S., 1991. Some tests of specific action for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58, 277–297.

    • Search Google Scholar
    • Export Citation

  • Aschauer, D.A., 1989. Is public expenditure productive? Journal of Monetary Economics, 23, 177–200.

  • Baldacci, E., Cangiano, M., Mahfouz, S., Schimmelpfennig, A., 2001. The effectiveness of fiscal policy in stimulating economic activity: an empirical investigation. Paper presented at the IMF Annual Research Conference, International Monetary Fund.

    • Search Google Scholar
    • Export Citation

  • Barro, R.J., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy, 98 (1), 103–117.

  • Barro, R.J., 1991. Economic growth in a cross section of countries. Quarterly Journal of Economics, 106, 407–443.

  • Barro, R.J., Sala-i-Martin, X., 1995. Economic growth. McGraw-Hill, New York.

  • Bassanini, A., Scarpetta, S., Hemmings, P., 2001. Economic growth: the role of policies and institutions. Panel Data Evidence from OECD Countries. Economics Department Working Paper 283. Organization for Economic Cooperation and Development, Paris.

    • Search Google Scholar
    • Export Citation

  • Buti, M., Sapir, A., 1998. Economic policy in EMU. Oxford University Press, Oxford.

  • Devarajan, S., Swaroop, V., Zou, H., 1996. The composition of public expenditure and economic growth. Journal of Monetary Economics, 37, 313–344.

    • Search Google Scholar
    • Export Citation

  • Easterly, W., Rebelo, S., 1993. Fiscal policy and economic growth: an empirical investigation. NBER Working Paper 4499. National Bureau of Economic Research, Cambridge, Massachusetts.

    • Search Google Scholar
    • Export Citation

  • Easterly, W., Rodriguez, C.A., Schmidt-Hebbel, K., 1994. Public sector deficits and macroeconomic performance. World Bank, Washington.

  • Easterly, W., Loayza, N., Montiel, P., 1997. Has Latin America’s post-reform growth been disappointing? Journal of International Economics, 43, 287–311.

    • Search Google Scholar
    • Export Citation

  • Fischer, S., 1983. Inflation and growth. NBER Working Paper No. 1235. National Bureau of Economic Research, Cambridge, Massachusetts.

  • Giavazzi, F., Jappelli, T., Pagano, M., 2000. Searching for nonlinear effects of fiscal policy: evidence from industrial and developing countries. NBER Working Paper 7460. National Bureau of Economic Research, Cambridge, Massachusetts.

    • Search Google Scholar
    • Export Citation

  • Greene, W., 2000. Econometric analysis. Prentice Hall, Upper Saddle River, N.J.

  • Hamilton, L.C., 1991. How robust is robust regression. Stata Technical Bulletin, 2, 21–26.

  • International Monetary Fund, 2002. Review of the key features of the Poverty Reduction and Growth Facility—staff analyses. Available via the Internet: http://www.imf.org/external/np/prgf/2002/031502.htm.

    • Search Google Scholar
    • Export Citation

  • Kneller, R., Bleaney, M., Gemmell, N., 1998. Growth, public policy and the government budget constraint: Evidence from OECD countries. University of Nottingham, Department of Economics Discussion Paper 98/14.

    • Search Google Scholar
    • Export Citation

  • Kneller, R., Bleaney, M., Gemmell, N., 1999. Fiscal policy and growth: evidence from OECD countries. Journal of Public Economics, 74, 171–190.

    • Search Google Scholar
    • Export Citation

  • Kneller, R., Bleaney, M., Gemmell, N., 2000. Testing the endogenous growth model: public expenditure, taxation and growth over the long run. University of Nottingham, Department of Economics Discussion Paper 00/25.

    • Search Google Scholar
    • Export Citation

  • Landau, D., 1986. Government and economic growth in the less developed countries: an empirical study for 1960-80. Economic Development and Cultural Change, 35, 35–75.

    • Search Google Scholar
    • Export Citation

  • Mackenzie, G.A., Orsmond, D., Gerson, P., 1997. The composition of fiscal adjustment and growth: lessons from fiscal reforms in eight economies. IMF Occasional Paper 149.

    • Search Google Scholar
    • Export Citation

  • Mendoza, E., Milesi-Ferretti, G.M., Asea, P., 1997. On the ineffectiveness of tax policy in altering long-run growth: Harberger’s superneutrality conjecture. Journal of Public Economics, 66, 99–126.

    • Search Google Scholar
    • Export Citation

  • McDermott, C.J., Wescott, R.F., 1996. An empirical analysis of fiscal adjustments. IMF Staff Papers, 43 (December), 725–753.

  • Perotti, R., 1999. Fiscal policy in good times and bad. Quarterly Journal of Economics, 114 (4), 1399–1436.

  • Sarel, M., 1996. Nonlinear effects of inflation on economic growth. IMF Staff Papers, 43 (March), 199–215.

  • Tanzi, V., Zee, H., 1996. Fiscal policy and long-run growth. IMF Working Paper No. 96/119.

  • Thomas, A., 2001. An exploration of the private sector response to changes in government saving across OECD countries. IMF Working Paper 01/69.

    • Search Google Scholar
    • Export Citation

  • von Hagen, J., Hughes Hallett, A., Strauch, R., 2002. Budgetary consolidation in Europe: quality, economic conditions, and persistence. Journal of Japanese and International Economies, 16 (4), 512–535.

    • Search Google Scholar
    • Export Citation

  • Aalen, Olivier, 1978, “Nonparametric Inference for Family of Counting Processes,” Annals of Statistics, Vol. 6, pp. 701–26.

  • Abed, George, and others, 1998, Fiscal Reforms in Low-Income Countries: Experience Under IMF-Supported Programs, IMF Occasional Paper No. 160 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Adam, Christopher, and David Bevan, 2001, “Nonlinear Effects of Public Deficits on Growth,” paper prepared for the Cornell/ISPE Conference on Public Finance and Development, 09 7-9, New York.

    • Search Google Scholar
    • Export Citation

  • Adam, Christopher, and David Bevan, 2003, “Staying the Course: Maintaining Fiscal Control in Developing Countries,” paper prepared for the Brookings Institution Trade Forum Conference, 05 15-16, Washington.

    • Search Google Scholar
    • Export Citation

  • Alesina, Alberto, and Silvia Ardagna, 1998, “Tales of Fiscal Adjustment,” Economic Policy, Vol. 27 (October), pp. 487–546.

  • Alesina, Alberto, and Roberto Perotti, 1995, “Fiscal Expansions and Adjustments in OECD Countries,” Economic Policy, Vol. 21 (October), pp. 205–48.

    • Search Google Scholar
    • Export Citation

  • Alesina, Alberto, and Roberto Perotti, and Jose Tavares, 1998, “The Political Economy of Fiscal Adjustments,” Brookings Papers on Economic Activity: 1, Brookings Institution.

    • Search Google Scholar
    • Export Citation

  • Ardagna, Sylvia, 2001, “Fiscal Policy Composition, Public Debt, and Economic Activity,” Public Choice, Vol. 109 (December), pp. 301–25.

    • Search Google Scholar
    • Export Citation

  • Chu, Ke-young, and others, 1995, Unproductive Public Expenditure: A Pragmatic Approach to Policy Analysis, IMF Pamphlet No. 48 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Cleves, Mario, William Gould, and Roberto Gutierrez, 2002, An Introduction to Survival Analysis Using Stata (College Station, Texas: Stata Press).

    • Search Google Scholar
    • Export Citation

  • Cox, D., 1972, “Regression Models and Life Tables,” Journal of the Royal Statistical Society, Series B, Vol. 34, pp. 187–220.

  • Gupta, Sanjeev, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados, 2002, “Expenditure Composition, Fiscal Adjustment, and Growth in Low-Income Countries,” IMF Working Paper No. 02/77 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados, 2004, “Fiscal Policy, Expenditure Composition, and Growth in Low-Income Countries,” Chapter 2 in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund). Also published in the Journal of International Money and Finance, Vol. 23, 2004.

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados, forthcoming, “The Persistence of Fiscal Adjustment in Developing Countries,” Applied Economics Letters.

    • Search Google Scholar
    • Export Citation

  • Hosmer, David W., and Stanley Lemeshow, 1999, Applied Survival Analysis: Regression Modeling of Time to Event Data (New York: John Wiley and Sons).

    • Search Google Scholar
    • Export Citation

  • Ize, Alain, 1991, “Measurement of Fiscal Performance in IMF-Supported Programs: Some Methodological Issues,” in How to Measure the Fiscal Deficit: Analytical and Methodological Issues, ed. by Mario I. Blejer and Adrienne Cheasty (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Kaplan, E.I., and P. Meier, 1958, “Nonparametric Estimation from Incomplete Observations,” Journal of the American Statistical Association, Vol. 53, pp. 457–81.

    • Search Google Scholar
    • Export Citation

  • Maroto, Reyes, and Carlos Mulas-Granados, 2001, “The Duration of Fiscal Consolidations in the European Union,” Fundación de Estudios de Economia Aplicada (FEDEA) Working Paper No. 2001/19 (Madrid, Spain).

    • Search Google Scholar
    • Export Citation

  • Perotti, Roberto, 1998, “The Political Economy of Fiscal Consolidations,” Scandinavian Journal of Economics, Vol. 100, No. 1, pp. 367–94.

    • Search Google Scholar
    • Export Citation

  • von Hagen, Jürgen, and Rolf Strauch, 2001, “Fiscal Consolidations: Quality, Economic Conditions, and Success,” Public Choice, Vol. 109 (December), pp. 327–46.

    • Search Google Scholar
    • Export Citation

  • von Hagen, Jürgen, Andrew Hughes Hallett, and Rolf Strauch, 2002, “Budgetary Consolidation in Europe: Quality, Economic Conditions, and Persistence,” Journal of the Japanese and International Economies, Vol. 16 (December), pp. 512–35.

    • Search Google Scholar
    • Export Citation

  • Abed, G.T., Gupta, S. (Eds.),2002. Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC.

  • Abed, G.T., et al., 1998. Fiscal reform in low-income countries: experience under IMF-supported programs. IMF Occasional Paper No. 160. International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Acemoglu, D., Verdier, T, 1998. Reward structures and the allocation of talent. American Economic Review 39, 17–33.

  • Adam, C.S., Bevan, D.L., 2000. Fiscal policy design in low-income countries. Paper prepared for UNU/WIDER research project on New Fiscal Policies for Poverty Reduction and Growth, Helsinki.

    • Search Google Scholar
    • Export Citation

  • Adam, C.S., Bevan, D.L., 2001. Nonlinear effects of public deficits on growth. Paper prepared at Cornell/ISPE Conference, Ithaca, NY.

  • Alesina, A., 1997. Fiscal adjustments in OECD countries: composition and macroeconomic effects. IMF Staff Papers 44, 210–248.

  • Alesina, A., Perotti, R., 1995. Fiscal expansion and fiscal adjustments in OECD countries. Economic Policy: A European Forum 21, 205–248.

    • Search Google Scholar
    • Export Citation

  • Alesina, A., Ardagna, S., Perotti, R., Schiantarelli, F., 1999. Fiscal policy, profits, and investment. NBER Working Paper No. W7207. National Bureau of Economic Research, Cambridge, MA.

    • Search Google Scholar
    • Export Citation

  • Baltagi, B., 1995. Econometric Analysis of Panel Data. Wiley, Chichester, NY.

  • Barro, R., Sala-i-Martin, X., 1995. Economic Growth. McGraw-Hill, NY.

  • Bengoa, M., Sanchez-Robles, B., 2003. Foreign direct investment, economic freedom, and growth: new evidence from Latin America. European Journal of Political Economy 19, 529–545. Special Issue on Economic Freedom.

    • Search Google Scholar
    • Export Citation

  • Berg, A., Krueger, A., 2003. Trade, growth and poverty: a selective study. IMF Working Paper No. 03/30. International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Bertola, G., Drazen, A., 1993. Trigger points and budget cuts: explaining the effects of fiscal austerity. American Economic Review 83, 11–26.

    • Search Google Scholar
    • Export Citation

  • Catao, L., Terrones, M., 2003. Fiscal deficits and inflation. IMF Working Paper No. 03/65. International Monetary Fund, Washington, DC.

  • Chauvet, L., 2002. Socio-political instability and the allocation of international aid by donors. European Journal of Political Economy 19, 33–59.

    • Search Google Scholar
    • Export Citation

  • Dabla-Norris, E., Wade, P., 2002. Production, rent seeking and wealth distribution. In:Abed, G.T., Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC, pp. 439–457.

    • Search Google Scholar
    • Export Citation

  • de Haan, J., Sturm, J.E., 2000. On the relationship between economic freedom and economic growth. European Journal of Political Economy 16, 215–241.

    • Search Google Scholar
    • Export Citation

  • de Haan, J., Sturm, J.E., 2003. Does more democracy lead to greater economic freedom? New evidence for developing countries. European Journal of Political Economy 19, 547–563. Special Issue on Economic Freedom.

    • Search Google Scholar
    • Export Citation

  • de la Fuente, A., 1997. Fiscal policy and growth in the OECD. CEPR Discussion Paper No. 1755. Centre for Economic Policy Research, London.

    • Search Google Scholar
    • Export Citation

  • Del Monte, A., Papagni, E., 2001. Public expenditure, corruption and economic growth: the case of Italy. European Journal of Political Economy 17, 1–16.

    • Search Google Scholar
    • Export Citation

  • Drazen, A., 2001. Political Economy in Macroeconomics. MIT Press, Cambridge, MA.

  • Duncan, O.D., 1975. Introduction to Structural Equations Model. Academic Press, New York.

  • Easterly, W, 2001. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. MIT Press, Cambridge, MA.

  • Economides, G., Philippopoulos, A., Price, S., 2003. How elections affect fiscal policy: revisiting the mechanism. European Journal of Political Economy 19, 777–792.

    • Search Google Scholar
    • Export Citation

  • Fischer, S., 1993. Role of macroeconomic factors in growth. Journal of Monetary Economics 32, 485–512.

  • Fischer, S., Sahay, R., Végh, C., 2002. Modern hyper- and high inflations. Journal of Economic Literature 40, 837–890.

  • Gelb, A., Hillman, A.L., Ursprung, H.W., 1998. Rents as distractions: why the exit from transition is prolonged. In: Baltas, N.C., Demopoulos, G., Hassid, J. (Eds.). Economic Interdependence and Cooperation in Europe. Springer, Berlin, 21–38.

    • Search Google Scholar
    • Export Citation

  • Giavazzi, F., Pagano, M., 1990. Can severe fiscal contractions be expansionary? Tales of two small European countries. NBER Macroeconomic Annual 1990. National Bureau of Economics Research, Cambridge, MA, 75–110.

    • Search Google Scholar
    • Export Citation

  • Graeff, P., Mehlkop, G., 2003. The impact of economic freedom on corruption: different patterns for rich and poor countries. European Journal of Political Economy 19, 605–620. Special Issue on Economic Freedom.

    • Search Google Scholar
    • Export Citation

  • Gupta, S., Davoodi, H.R., Tiongson, E.R., 2001a. Corruption and the provision of health care and education services. In: Arvind, K., Jain, A.K. (Eds.), The Political Economy of Corruption. Routledge, London, pp. 111–141. Reprinted in 2002 in:Abed, G.T., Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC, pp. 245–279.

    • Search Google Scholar
    • Export Citation

  • Gupta, S., de Mello, L., Sharan, R., 2001b. Corruption and military spending. European Journal of Political Economy 17, 749–777. Reprinted in 2002 in:Abed, G.T., Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC, pp. 300–332.

    • Search Google Scholar
    • Export Citation

  • Gupta, S., Clements, B., Baldacci, E., Mulas-Granados, C., 2002. Expenditure composition, fiscal adjustment, and growth in low-income countries. IMF Working Paper No. 02/77. International Monetary Fund, Washington, DC. [Chapter 2 in this volume— Ed.]

    • Search Google Scholar
    • Export Citation

  • Gupta, S., Clements, B., Baldacci, E., Mulas-Granados, C., 2004. Fiscal policy, expenditure composition, and growth in low-income countries. Journal of International Money and Finance (in press).

    • Search Google Scholar
    • Export Citation

  • Gupta, S., Clements, B., Pivovarsky, A., Tiongson, E.R., 2003. Foreign aid and revenue response: does the composition of aid matter? IMF Working Paper No. 03/176. International Monetary Fund, Washington, DC. [Chapter 14 in this volume— Ed.]

    • Search Google Scholar
    • Export Citation

  • Hamilton, L.C., 1991. How robust is robust regression? Stata Technical Bulletin 2, 21–26. Reprinted in Stata Technical Bulletin Reprints 1, 169–175.

    • Search Google Scholar
    • Export Citation

  • Hillman, A.L., 2002. The World Bank and the persistence of poverty in poor countries. European Journal of Political Economy 18, 783–795.

    • Search Google Scholar
    • Export Citation

  • Hillman, A.L., 2003. Public Finance and Public Policy: Responsibilities and Limitations of Government. Cambridge University Press, New York.

    • Search Google Scholar
    • Export Citation

  • Hillman, A.L., Jenkner, E., 2002. User payments for basic education in low-income countries. IMF Working Paper No. 02/182. Also published as Chapter 10 in:Gupta, S., Clements, B., Inchauste, G. (Eds.), Helping Countries Develop: The Role of Fiscal Policy. International Monetary Fund, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Hjelm, G., 2002. Effects of fiscal contractions: the importance of preceding exchange rate movements. Scandinavian Journal of Economics 104, 423–441.

    • Search Google Scholar
    • Export Citation

  • Khan, M., Senhadji, A., 2001. Threshold effects in the relationship between inflation and growth. IMF Staff Papers 48, 1–21.

  • Kneller, R., Bleaney, M., Gemmell, N., 1999. Fiscal policy and growth: evidence from OECD countries. Journal of Public Economics 74, 171–190.

    • Search Google Scholar
    • Export Citation

  • Lambertini, L., Tavares, J., 2001. Exchange rates and fiscal adjustments: evidence from OECD and implications for EMU. Unpublished paper, Department of Econmics, University of California, Los Angeles.

    • Search Google Scholar
    • Export Citation

  • Lindbeck, A., Snower, D., 1989, The Insider-Outsider Theory of Employment and Unemployment. MIT Press, Cambridge, MA.

  • Mauro, P., 1998. Corruption and the composition of government expenditure. Journal of Public Economics 69, 263–279. Reprinted 2002 in:Abed, G.T., Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC, 225–244.

    • Search Google Scholar
    • Export Citation

  • Rajkumar, A., Swaroop, V., 2002. Public spending and outcomes: does governance matter? World Bank Policy Research Working Paper No. 2840. World Bank, Washington, DC.

    • Search Google Scholar
    • Export Citation

  • Van Rijckeghem, C., Weder, B., 2001. Bureaucratic corruption and the rate of temptation: do wages in the civil service affect corruption and by how much? Journal of Development Economics 65, 307–331. Reprinted 2002 in:Abed,G.T., Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. International Monetary Fund, Washington, DC, pp. 59–88.

    • Search Google Scholar
    • Export Citation

  • von Hagen, J., Hughes Hallett, A., Strauch, R., 2002. Budgetary consolidation in Europe: quality, economic conditions, and persistence. Journal of the Japanese and International Economies 16, 512–535.

    • Search Google Scholar
    • Export Citation

  • World Bank, 2001, “Administrative and Civil Service Reform” (Washington: World Bank). Available via the Internet: http://www.worldbank.org/publicsector/civilservice/common.htm.

    • Search Google Scholar
    • Export Citation

  • Agénor, Pierre-Richard, and Peter Montiel, 1996,Development Macroeconomics (Princeton, New Jersey: Princeton University Press).

  • Blundell, Richard, and Stephen Bond, 1998, “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,” Journal of Econometrics, Vol. 87 (11), pp. 115 -43.

    • Search Google Scholar
    • Export Citation

  • Chowdhury, Abdur R., 2001, “Foreign Debt and Growth in Developing Countries: A Sensitivity and Causality Analysis,” paper presented at WIDER Conference on Debt Relief (Helsinki: United Nations University).

    • Search Google Scholar
    • Export Citation

  • Cohen, Daniel, 1993, “Low Investment and Large LDC Debt in the 1980s,” American Economic Review, Vol. 83 (06), pp. 437 -49.

  • Deshpande, Ashwini, 1997, “The Debt Overhang and the Disincentive to Invest,” Journal of Development Economics, Vol. 52 (02), pp. 169 -87.

    • Search Google Scholar
    • Export Citation

  • Dijkstra, Geske, and Niels Hermes, 2001, “The Uncertainty of Debt Service Payments and Economic Growth of Highly Indebted Poor Countries: Is There a Case for Debt Relief?” (unpublished; Helsinki: United Nations University).

    • Search Google Scholar
    • Export Citation

  • Elbadawi, Ibrahim A., Benno J. Ndulu, and Njuguna Ndung’u, 1997, “Debt Overhang and Economic Growth in Sub-Saharan Africa,” Chapter 5 in External Finance for Low-Income Countries, ed. by Zubair Iqbal and Ravi Kanbur (Washington: International Monetary Fund), pp. 49–76.

    • Search Google Scholar
    • Export Citation

  • Fosu, Augustin K., 1999, “The External Debt Burden and Economic Growth in the 1980s: Evidence from Sub-Saharan Africa,” Canadian Journal of Development Studies, Vol. 20, No. 2, pp. 307 -18.

    • Search Google Scholar
    • Export Citation

  • Greene, Joshua, and Delano Villanueva, 1991, “Private Investment in Developing Countries: An Empirical Analysis,” in Staff Papers (International Monetary Fund), Vol. 38 (03), pp. 33–58.

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, and others, 2002,Is the PRGF Living Up to Expectations? An Assessment of Program Design, IMF Occasional Paper No. 216 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, and others, 2004a, “Fiscal Policy, Expenditure Composition, and Growth in Low-Income Countries,” Chapter 2 in Helping Countries Develop: The Role of Fiscal Policy (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, and others, 2004b, “Foreign Aid and Revenue Response: Does the Composition of Aid Matter?” Chapter 14 in Helping Countries Develop: The Role of Fiscal Policy (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Hansen, Henrik, 2002, “The Impact of Aid and External Debt on Growth and Investment: Insights from Cross-Country Regression Analysis,” CREDIT Research Paper No. 02/26 (Nottingham, United Kingdom: University of Nottingham, Centre for Research in Economic Development and International Trade).

    • Search Google Scholar
    • Export Citation

  • Khan, Mohsin S., and Manmohan S. Kumar, 1997, “Public and Private Investment and the Growth Process in Developing Countries,” Oxford Bulletin of Economics and Statistics, Vol. 59 (02), pp. 69–88.

    • Search Google Scholar
    • Export Citation

  • Krugman, Paul, 1988, “Financing vs. Forgiving a Debt Overhang: Some Analytical Issues,” Journal of Development Economics, Vol. 29, pp. 253–68.

    • Search Google Scholar
    • Export Citation

  • Oks, Daniel, and Sweder van Wijnbergen, 1995, “Mexico After the Debt Crisis: Is Growth Sustainable?” Journal of Development Economics, Vol. 47 (06), pp. 155 -78.

    • Search Google Scholar
    • Export Citation

  • Oxfam International, 1999, “Debt Relief and Poverty Reduction: Meeting the Challenge,” Oxfam Briefing Paper. Available via the Internet: http://www.oxfam.org/eng/pdf/pp9908_debt_relief_and_poverty_reduction.pdf.

    • Search Google Scholar
    • Export Citation

  • Pattillo, Catherine, Hélène Poirson, and Luca Ricci, 2002, “External Debt and Growth,” IMF Working Paper 02/69 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Pattillo, Catherine, Hélène Poirson, and Luca Ricci,, 2003, “What Are the Channels Through Which External Debt Affects Growth?” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Sachs, Jeffrey, and Andrew Warner, 1995, “Economic Reform and the Process of Global Integration,” Brookings Papers on Economic Activity:1, pp. 1–118.

    • Search Google Scholar
    • Export Citation

  • Savvides, Andreas, 1992, “Investment Slowdown in Developing Countries during the 1980s: Debt Overhang or Foreign Capital Inflows,” Kyklos, Vol. 45, No. 3, pp. 363 -78.

    • Search Google Scholar
    • Export Citation

  • Serieux, John, and Yiagadeesen Samy, 2001, “The Debt Service Burden and Growth: Evidence from Low-Income Countries,” North-South Institute Working Paper (Ottawa: North-South Institute).

    • Search Google Scholar
    • Export Citation

  • Serven, Luis, 1997, “Uncertainty, Instability, and Irreversible Investment: Theory, Evidence and Lessons for Africa,” World Bank Policy Research Working Paper No. 1722 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Serven, Luis, and Andres Solimano, 1993, “Debt Crisis, Adjustment Policies, and Capital Formation in Developing Countries: Where Do We Stand?” World Development, Vol. 21 (01), pp. 127 -40.

    • Search Google Scholar
    • Export Citation

  • Stephens, Marc, 2001, “External Debt, Human Capital, and Growth in Heavily Indebted Poor Countries” (unpublished Ph.D. thesis; New York: New York University).

    • Search Google Scholar
    • Export Citation

  • Sturm, Jan-Egbert, 2001, “Determinants of Public Capital Spending in Less-Developed Countries,” CCSO Centre for Economics Research Working Paper No. 200107 (Munich: University of Groningen).

    • Search Google Scholar
    • Export Citation

  • Tanzi, Vito, and Hamid Davoodi, 1997, “Corruption, Public Investment, and Growth,” IMF Working Paper 97/139 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Wagner, Adolf, 1958, “Three Extracts on Public Finance,” in Classics in the Theory of Public Finance, ed. by Richard A. Musgrave and Alan T. Peacock (New York: Macmillan), pp. 1–15.

    • Search Google Scholar
    • Export Citation

  • Warner, Andrew M., 1992, “Did the Debt Crisis Cause the Investment Crisis?” Quarterly Journal of Economics, Vol. 107 (11), pp. 1161 -86.

    • Search Google Scholar
    • Export Citation

  • Baldacci, Emanuele, Benedict Clements, Sanjeev Gupta, and Carlos Mulas-Granados, 2004, “Persistence of Fiscal Adjustments and Expenditure Composition in Low-Income Countries,” Chapter 3 in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Baldacci, Emanuele, Arye Hillman, and Naoko Kojo, 2003, “Growth, Governance, and Fiscal Policy in Low-Income Countries,” Chapter 4 in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Chalk, Nigel, and Richard Hemming, 2000, “Assessing Fiscal Sustainability in Theory and Practice,” IMF Working Paper 00/81 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Cohen, Daniel, 1997, “Growth and External Debt: A New Perspective on the African and Latin American Tragedies,” CEPR Discussion Paper No. 1753 (London: Centre for Economic Policy Research).

    • Search Google Scholar
    • Export Citation

  • Cuddington, John, 1997, “Analyzing the Sustainability of Fiscal Deficits in Developing Countries,” World Bank Policy Research Working Paper No. 1784 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Easterly, William, 2001, “Growth Implosions, Debt Explosions, and My Aunt Marilyn: Do Growth Slowdowns Cause Public Debt Crises?” World Bank Policy Research Working Paper, No. 2531 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados, 2004, “Fiscal Policy, Expenditure Composition, and Growth in Low-Income Countries,” Chapter 2 in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Gupta, Sanjeev, Benedict Clements, Alexander Pivovarksy, and Erwin Tiongson, 2004, “Foreign Aid and Revenue Response: Does the Composition of Aid Matter?” Chapter 14 in Helping Countries Develop: The Role of Fiscal Policy, ed. by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Heller, Peter, 2003, Who Will Pay? Coping with Aging Societies, Climate Change, and Other Long-Term Fiscal Challenges (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Hemming, Richard, Michael Kell, and Axel Schimmelpfennig, 2003, Fiscal Vulnerability and Financial Crises in Emerging Market Economies, IMF Occasional Paper No. 218 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 2001, Government Finance Statistics Manual (Washington).

  • International Monetary Fund, 2003, World Economic Outlook, September 2003: Public Debt in Emerging Markets, Chapter 3, World Economic and Financial Surveys (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, 2002, “Assessing Sustainability,” prepared by the Policy Development and Review Department (Washington: IMF). Available via the Internet: http://www.imf.org/external/np/pdr/sus/2002/eng/052802.htm.

    • Search Google Scholar
    • Export Citation

  • Kraay, Aart, and Vikram Nehru, 2004, “When Is Debt Sustainable?” World Bank Policy Research Working Paper No. 3200.

  • Patillo, Catherine, Helen Poirson, and Luca Ricci, 2002, “External Debt and Growth,” IMF Working Paper 02/69 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Alesina, Alberto, and Roberto Perotti, 1996, “Fiscal Adjustment in OECD Countries: Composition and Macroeconomic Effects,” IMF Working Paper 96/70 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Doré, Ousmane, and Jean-Claude Nachega, 2000, “Budgetary Convergence in the WAEMU: Adjustment Through Revenue or Expenditure?” IMF Working Paper 00/109 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Talvi, Ernesto, and Carlos A. Végh, 2000, “Tax Base Variability and Procyclical Fiscal Policy,” NBER Working Paper No. 7499 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation