Garrido, LeonardoCarneiro, Francisco G.2015-07-142015-07-142015-06https://hdl.handle.net/10986/22166This paper presents new evidence on the patterns of cyclicality in the fiscal policy stance of developing and industrialized countries over a period of more than three decades covering 180 countries during 1980–2012. First, the paper considers issues of robustness in the choice of the proxy for fiscal cyclicality by using alternative filtering methods to check whether this influences the results and leads to any differences in a country’s reported within-period average, and across-period changes in fiscal stance. Second, a country-specific approach is used to split the sample into sub-periods based on a test for structural break in the series of real gross domestic product per capita. Third, the paper investigates the extent to which countries behave pro-cyclically or counter-cyclically in different phases of the business cycle. In line with earlier findings in the literature, the analysis confirms that there is a causal link running from stronger institutions to less pro-cyclical fiscal policy, even after controlling for the endogeneity of institutions and other determinants of fiscal policy.en-USCC BY 3.0 IGOOUTPUT VOLATILITYMONETARY POLICYCAPITAL MARKETSCAPITA INCOMEGOVERNMENT EXPENDITURESFISCAL BALANCESLAGSINTERNATIONAL CAPITALINTERNATIONAL COUNTRY RISK GUIDESTRUCTURAL CHANGEINCOMEINTERESTGOVERNMENT SPENDINGEMERGING ECONOMIESBAND-PASS FILTERREAL GDPEXCHANGEGOVERNMENT REVENUESGDP PER CAPITAMACROECONOMIC POLICYDEBT MANAGEMENTINTERNATIONAL FINANCIAL MARKETSDEVELOPING COUNTRIESPOLITICAL ECONOMYEXPORTERSINTERNATIONAL CAPITAL MARKETSREVENUESFISCAL POLICYMACROECONOMIC CONDITIONSVARIABLESCORRELATION COEFFICIENTRICH ECONOMIESINTERACTION TERMSTAXCORRELATION COEFFICIENTSRESERVEINFLATIONINTERNATIONAL BANKINSTRUMENTSDEVELOPED COUNTRIESTRENDSECONOMIC OUTLOOKCENTRAL BANKGOVERNMENT CONSUMPTIONECONOMIC ACTIVITYCHOICEFISCAL POLICIESFISCAL RULESPER CAPITA INCOMEDEVELOPMENT ECONOMICSMIDDLE INCOMECYCLICAL POLICIESCRISISECONOMETRICSINTEREST RATESMONETARY FUNDCRITERIADEBTMARKETSHIGH INCOMEGROSS DOMESTIC PRODUCT PER CAPITABUSINESS CYCLEMIDDLE-INCOME COUNTRIESTAX REVENUESFLUCTUATIONSRECESSIONSRESERVESGROSS DOMESTIC PRODUCTINCREASE IN EXPENDITURESFINANCEECONOMIC RESEARCHPUBLIC INVESTMENTEXPENDITUREFISCALFEDERAL RESERVECREDIT CONSTRAINTSGOODECONOMIC PERFORMANCEFISCAL RULEWAGESINSTRUMENTAL VARIABLE ESTIMATIONVOLATILITYECONOMETRIC ANALYSISCOUNTRY RISKLEVEL OF INCOMEFINANCIAL CRISISVALUECREDITSTRUCTURAL BREAKSMACROECONOMICSPRUDENTIAL REGULATIONSGOVERNMENT EXPENDITUREEXPENDITURESCAPITAL FLOWSPROPERTIESNUISANCE PARAMETERPRIVATE SECTORREAL GROSS DOMESTIC PRODUCTFISCAL STANCEEXPANSIONARY FISCAL POLICYPUBLIC DEBTPRIMARY BALANCEFIXED EFFECTSFISCAL SUSTAINABILITYINSURANCEMACROECONOMIC VARIABLESBUSINESS CYCLESCYCLICAL FISCAL POLICYGDPGOODSTHEORYINTERNATIONAL MONETARY FUNDINVESTMENTRANDOM WALKNEOCLASSICAL MODELSDOMESTIC CREDITSHAREFISCAL MANAGEMENTFINANCIAL MARKETSFISCAL BALANCERISK MANAGEMENTECONOMIC TIME SERIESLENDINGCHECKSTICKY PRICESCREDIT GROWTHFISCAL BEHAVIORMACROECONOMIC POLICIESFISCAL DISCIPLINEGDP DEFLATOROUTCOMESMIDDLE INCOME COUNTRIESPRO-CYCLICAL POLICIESDEVELOPMENT POLICYGROWTHWorking PaperWorld Bank10.1596/1813-9450-7293