Overview
- Develops a new and plausible explanation as to why and when governments should control the budget deficits procyclically
- Empirically shows how democratic economies whose government functions weakly should adopt procyclical fiscal policies
- Provides a worm-eye, in-country analysis of Japan and shows that procyclical analysis should be adopted in rural areas
- Presents a comprehensive review of the recent discussion of fiscal cyclicality
Part of the book series: SpringerBriefs in Economics (BRIEFSECONOMICS)
Part of the book sub series: Development Bank of Japan Research Series (BRIEFSDBJRS)
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Table of contents (3 chapters)
Keywords
About this book
Conventional wisdom dictates that a fiscal policy should be counter-cyclical. However, contrary to this conventional views, recent research has demonstrated that fiscal policy is actually procyclical in most developing countries. In this book, we attempt to propose a new interpretation of this procyclicality after reviewing theoretical and empirical evolution of the research. In particular, by incorporating the political effort behavior of private agents into a weak government model, we explore how income fluctuations affect the optimal budget deficits in a political economy. If the government can control the political behavior, normally, the optimal budget deficit should rise in a recession as a first-best case; however, interestingly, a recession does not necessarily prompt an increase in the budget deficits in a second-best political economy. The response of the budget deficits to income fluctuations mainly depends on the efficiency of political effort, which may correspond to the degree of democracy and bureaucratic efficiency of the governments. We test the prediction of the pro-cyclical fiscal policy and find it applicable for democratic countries with semi-efficient governments including Japan.
Authors and Affiliations
About the authors
Keigo Kameda is a Professor of Economics at School of Policy Studies, Kwansei Gakuin University. His main areas of research are public finance and macroeconomic policies. Born in 1970, Prof. Kameda received a Bachelor’s degree in Economics at Keio University in 1993 and a Ph.D. in Economics at Keio University in 2014. He was appointed Professor of Economics at School of Policy Studies, Kwansei Gakuin University in 2015.
Bibliographic Information
Book Title: Procyclical Fiscal Policy
Authors: Toshihiro Ihori, Keigo Kameda
Series Title: SpringerBriefs in Economics
DOI: https://doi.org/10.1007/978-981-13-2995-1
Publisher: Springer Singapore
eBook Packages: Economics and Finance, Economics and Finance (R0)
Copyright Information: Development Bank of Japan 2018
Softcover ISBN: 978-981-13-2994-4Published: 14 January 2019
eBook ISBN: 978-981-13-2995-1Published: 28 December 2018
Series ISSN: 2191-5504
Series E-ISSN: 2191-5512
Edition Number: 1
Number of Pages: XIII, 68
Number of Illustrations: 10 b/w illustrations, 9 illustrations in colour
Topics: Public Economics, Asian Economics