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From Fiscal Cyclicality to Fiscal Stress: The Role of Asymmetric Public Consumption Rigidities in Emerging Markets

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dc.contributor.authorRiera-Crichton, Daniel
dc.contributor.authorRuiz Orrico, Pilar
dc.contributor.authorVuletin, Guillermo
dc.date.accessioned2024-11-26T15:34:22Z
dc.date.available2024-11-26T15:34:22Z
dc.date.issued2024-11-26
dc.description.abstractMacroeconomic textbooks warn that procyclical public spending can amplify economic volatility and cause fiscal stress. However, the latter risks materialize only when governments fail to reduce spending during downturns as much as they increase it during booms. This study investigates asymmetries in the cyclicality of public consumption and finds that emerging markets exhibit “downward rigidity”: they boost spending during upswings but do not effectively cut back during downturns. In contrast, advanced economies maintain steady levels of public consumption regardless of economic conditions, making them effectively acyclical. Downward rigidity in public consumption not only paves the way for fiscal stress when the economy slows, but also leads to sustained growth in the size of the state.en
dc.identifierhttp://documents.worldbank.org/curated/en/099607111252432046/IDU1b9e86b7d1cc5f140eb19cb4136ed11801e00
dc.identifier.doi10.1596/1813-9450-10984
dc.identifier.urihttps://hdl.handle.net/10986/42469
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesPolicy Research Working Paper; 10984
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectBUSINESS CYCLE
dc.subjectCYCLICALITY
dc.subjectDOWNWARD RIGIDITY
dc.subjectPUBLIC CONSUMPTION
dc.titleFrom Fiscal Cyclicality to Fiscal Stressen
dc.title.subtitleThe Role of Asymmetric Public Consumption Rigidities in Emerging Marketsen
dc.typeWorking Paper
dspace.entity.typePublication
okr.date.disclosure2024-11-26
okr.date.doiregistration2025-04-14T11:50:09.898079Z
okr.date.lastmodified2024-11-25T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099607111252432046/IDU1b9e86b7d1cc5f140eb19cb4136ed11801e00
okr.guid099607111252432046
okr.identifier.docmidIDU-b9e86b7d-cc5f-40eb-9cb4-36ed11801e00
okr.identifier.doi10.1596/1813-9450-10984
okr.identifier.externaldocumentum34427475
okr.identifier.internaldocumentum34427475
okr.identifier.reportWPS10984
okr.import.id5875
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099607111252432046/pdf/IDU1b9e86b7d1cc5f140eb19cb4136ed11801e00.pdfen
okr.region.geographicalWorld
okr.topicMacroeconomics and Economic Growth::Business Cycles and Stabilization Policies
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicGovernance::Governance and the Financial Sector
okr.unitChief Economist (LCRCE)
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