1 / 12

The Economics of “Fiscal Space”

The Economics of “Fiscal Space”. Shanta Devarajan World Bank. Two tautologies. Increasing the fiscal deficit to spend on productive expenditures may lower the debt-to-GDP ratio. Two tautologies (cont’d). Two questions. Which components of K 1 ,K 2 ,K 3 ,G 1 ,G 2 are “productive”?

emartone
Télécharger la présentation

The Economics of “Fiscal Space”

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Economics of “Fiscal Space” Shanta Devarajan World Bank

  2. Two tautologies • Increasing the fiscal deficit to spend on productive expenditures may lower the debt-to-GDP ratio

  3. Two tautologies (cont’d)

  4. Two questions • Which components of K1,K2,K3,G1,G2 are “productive”? • Empirically estimate (Barro, Easterly and Rebelo, Devarajan-Swaroop-Zou) • A priori classification (infrastructure, health, education are productive, defense is not) • Problem: Public spending on some components (such as health, education) are not necessarily aimed at growth

  5. Bigger problem: Public spending does not even achieve health and education * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. School completion from Bruns, Mingat and Rakatomalala 2003

  6. Bigger problem: Public spending does not even achieve health and education * Percent deviation from rate predicted by GDP per capita Source: Spending and GDP from World Development Indicators database. Under-5 mortality from Unicef 2002

  7. Determinants of infant mortality in Malaysia

  8. In 1995, survey of 250 primary schools in 19 of 39 districts; Grants for Primary Education in Uganda Primary Education in Uganda (PETS) US$ per Student 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1995 1994 1993 1999 1990 1991 Intended Grant Amount Received by School (mean)

  9. All India Teacher Absence Map (Public Schools) Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”

  10. India 2003: Doctor absence from primary health clinics by state and reason

  11. Two questions (cont’d) • Is an appropriate rule-of-thumb? (Agenor, IMF) Rules v. Discretion

  12. Implications for modeling exercise • Analytical models • Incorporate government failure (time-inconsistency) • Empirical estimates of public sector inefficiency • What to do about it?

More Related