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Articles 1 - 17 of 17
Full-Text Articles in Social and Behavioral Sciences
Why Do Countries Adopt Fiscal Rules?, John Thornton, Yener Altunbas
Why Do Countries Adopt Fiscal Rules?, John Thornton, Yener Altunbas
John Thornton
This paper examines which economic, institutional and political charac- teristics of countries affect the likelihood that a numeral rule will be adopted as part of a fiscal strategy to limit the level of public debt. We estimate a panel binary response model over the period 1970–2012 for 110 countries, of which 58 opted to adopt such a rule. Our results suggest that the probability such a rule will be adopted is greater if a country has a high level of public debt, a relatively inflexible exchange rate regime, has already adopted inflation targeting, has deep credit markets and if other …
Does Foreign Aid Reduce Tax Revenue? Further Evidence, John Thornton
Does Foreign Aid Reduce Tax Revenue? Further Evidence, John Thornton
John Thornton
A common criticism of foreign aid is that it reduces domestic tax effort. Empirical research on the issue has been hampered by the failure to tackle endogeneity issues effectively. We use measures of geographical and cultural distance to donor countries as instrumental variables to uncover the causal effect of aid on tax revenue in a panel of 93 countries. The tax to GDP ratio is found to decrease following aid inflows. This reduction in tax effort is statistically and economically significant; a one SD increase in aid causes a 0.52 percentage point drop in the tax-to-GDP ratio. The results indicate …
Fiscal Decentralization And Governance, John Thornton
Fiscal Decentralization And Governance, John Thornton
John Thornton
The literature on the economics of fiscal decentralization stresses the potential for both positive and negative effects on governance in a country. Using a data set comprising sixty-four developed and developing economies and several different measures of fiscal decentralization, the authors find that countries in which a larger share of fiscal revenues and expenditures are located at the level of subnational governments appear to be less corrupt. The authors also find that the beneficial impact of fiscal decentralization on corruption is mitigated in the presence of mechanisms enforcing vertical administrative decentralization. The results indicate that fiscal decentraliza- tion appears to …
The Intertemporal Relation Between Government Revenue And Expenditure In The United Kingdom, 1750 To 2004, John Thornton, Lusine Lusinyan
The Intertemporal Relation Between Government Revenue And Expenditure In The United Kingdom, 1750 To 2004, John Thornton, Lusine Lusinyan
John Thornton
We examine the intertemporal relation between government revenue and expenditure in the UK during 1750 to 2004. We pay particular attention to long run trends by applying a battery of unit root and cointegration techniques to the data, and we use a modified Granger causality test on data spans organized around structural breaks in the series. The results suggest that, allowing for structural breaks, UK real revenue and spending are I(1) series and cointegrated and that Granger causality runs from government spending to revenue. As such, the ‘spend-tax’ hypothesis appears to best characterize the long run intertemporal relation between government …
Fiscal Decentralization And Fiscal Consolidations In Emerging Market Economies, John Thornton
Fiscal Decentralization And Fiscal Consolidations In Emerging Market Economies, John Thornton
John Thornton
Results using event study analysis based on a data panel of expenditure and revenue developments in emerging market economies during 1972–2001 indicate that subnational governments supported fiscal consolidation efforts by cutting their capital expenditure and increasing their revenues.
Government Size And The Stability Of Output: Evidence From Emerging Market Economies, John Thornton
Government Size And The Stability Of Output: Evidence From Emerging Market Economies, John Thornton
John Thornton
Fata ́ s and Mihov (2001a, b) reported a negative and statistically significant relation between government size and output variability in a cross-section of 20 Organization for Economic Cooperation and Development (OECD) countries and concluded that large governments stabilize output. This conclusion does not appear to be valid for Emerging Market Economies (EMEs). Results from cross-section and combined cross-section and time series regressions for a sample of 21 EMEs for the period 1970 to 2001 indicate that the relation between government size and output volatility is statistically significant and positive.
Who Chooses To Adopt Fiscal Responsibility Laws? Evidence From Emerging Market Economies, John Thornton
Who Chooses To Adopt Fiscal Responsibility Laws? Evidence From Emerging Market Economies, John Thornton
John Thornton
In recent years, at least 10 emerging market economies have sought to anchor their fiscal frameworks in fiscal responsibility laws. Key factors in the decision appear to include a prior improvement in fiscal discipline, particularly in the context of a federal fiscal system, substantial ethnic fractionalization and vulnerability to adverse shocks, such as real exchange rate volatility and inflation.
Fiscal Sustainability In A Panel Of Asian Countries, John Thornton
Fiscal Sustainability In A Panel Of Asian Countries, John Thornton
John Thornton
Panel cointegration techniques indicate that government revenue (REV) and expenditure (EXP) in a panel of five Asian economies for the period 1974 to 2001 were nonstationary and cointegrated series. However, the cointegration coefficient was significantly less than unity, indicating ‘weak’ fiscal sustainability and the likelihood that policy measures would be needed to put the public finances on a more sustainable basis
Do Fiscal Responsibility Laws Matter? Evidence From Emerging Markets Suggests Not, John Thornton
Do Fiscal Responsibility Laws Matter? Evidence From Emerging Markets Suggests Not, John Thornton
John Thornton
This paper asks whether the adoption of fiscal responsibility laws (FRLs) has improved fiscal performance in nine emerging market economies, as measured by developments in their key fiscal balances. Examining these economies alone, their fiscal performance improved on average between the period before FLRs were adopted and the period after they were adopted. However, emerging market economies that did not adopt FLRs also experienced improvements in their fiscal performance around the same time. The finding suggests that the better fiscal performance in the nine emerging market economies resulted from something other than the adoption of FLRs.
The Sustainability Of South African Fiscal Policy: An Historical Perspective, John Thornton, Lusine Lusinyan
The Sustainability Of South African Fiscal Policy: An Historical Perspective, John Thornton, Lusine Lusinyan
John Thornton
This article examines the issue of long-term fiscal sustainability in South Africa by applying a battery of recently developed unit root and cointegration tests to real revenue and spending data the period 1895 to 2005. The results provide evidence that, allowing for structural breaks, South African revenue and spending during this period were I(1) series and cointegrated, with the estimated long-run equilibrium relation supporting the presence of a weak deficit sustainability condition.
Natural Resource Endowments And The Domestic Revenue Effort, John Thornton, Fabian Bornhorst, Sanjeev Gupta
Natural Resource Endowments And The Domestic Revenue Effort, John Thornton, Fabian Bornhorst, Sanjeev Gupta
John Thornton
We examine whether there is evidence of an offset between government revenues from hydrocarbon (oil and gas) related activities and revenues from other domestic sources in a panel of 30 hydrocarbon producing countries. Our main finding is that there is an offset of about 20%, which is robust to the inclusion of control variables, the exclusion of outliers, and alternate estimation methodologies. While the impact of the offset on long-term development prospects is not clear, there is a risk of significant adjustment costs in moving to a higher level of domestic taxation once natural resources are depleted.
The Exchange Rate And Fiscal Consolidation Episodes In Emerging Market Economies, John Thornton, Amine Mati
The Exchange Rate And Fiscal Consolidation Episodes In Emerging Market Economies, John Thornton, Amine Mati
John Thornton
An analysis of fiscal consolidations in emerging market economies during 1970–2004 suggests that exchange rate depreciation raises the probability of a fiscal consolidation being successful, including when controlling for debt, growth, the composition of the consolidation, and degree of democracy.
Fiscal Institutions And The Relation Between Central And Sub-National Government Fiscal Balances, John Thornton
Fiscal Institutions And The Relation Between Central And Sub-National Government Fiscal Balances, John Thornton
John Thornton
Skeptics of fiscal decentralization argue that it can complicate fiscal stabilization policies at the level of the central government because of uncoordinated fiscal actions by the national and sub-national tiers of government. However, panel data estimates for OECD economies suggest that this danger has been overstated in that changes in the fiscal balances of central and sub-national governments are highly positively correlated. This result partly reflects the success of institutional arrangements that govern intergovernmental fiscal relations and appears unrelated to the extent of fiscal decentralization.
Explaining Pro-Cyclical Fiscal Policy In African Countries, John Thornton
Explaining Pro-Cyclical Fiscal Policy In African Countries, John Thornton
John Thornton
Simple time series regressions for 37 low-income African countries during 1960–2004 suggest that government consumption is highly pro-cyclical,with consumption responding more than proportionately to fluctuations in output in many cases. The results from a cross-country specification suggest that government consumption is more procyclical in those African countries that are more reliant on foreign aid inflows and that are less corrupt, and that it is less procyclical in countries with unequal income distribution and that are more democratic. These results contrast with those from recent research using data sets that comprise a more diverse groups of countries in terms of geography …
Further Evidence On Revenue Decentralization And Inflation, John Thornton
Further Evidence On Revenue Decentralization And Inflation, John Thornton
John Thornton
Results from a panel regression study of 19 OECD member countries suggest that when the measure of revenue decentralization is limited to the revenues over which sub-national governments have full autonomy, its impact on inflation is not statistically significant.
Fiscal Decentralization And Economic Growth Reconsidered, John Thornton
Fiscal Decentralization And Economic Growth Reconsidered, John Thornton
John Thornton
Recent studies examining the relation between fiscal decentralization and economic growth have failed to take account of the extent of the independent taxing powers available to sub-national governments and thus have substantially overstated the degree of effective decentralization. Results from a cross section study of 19 OECD member countries suggest that when the measure of fiscal decentralization is limited to the revenues over which sub-national governments have full autonomy, its impact on economic growth is not statistically significant.
The Veterans' Bonus Of 1936, Lester G. Telser