The main objective of this paper is to contribute to the literature on employment-GDP elasticities by assessing the determinants of cross-country variations in employment elasticities, focusing particularly on the role of demographic and macroeconomic variables. Long-term employment-GDP elasticities are estimated using an unbalanced panel of 90 developing countries from 1991 to 2011 using a two steps estimation strategy. The most important results are: (i) Elasticity estimates vary considerably across countries. (ii) Employment elasticities tend to be higher in more advanced and closed countries. (iii) Macroeconomic policies aimed at reducing macroeconomic (price) volatility are found to have significant effect in increasing employment elasticities. (vi) Employment intensity of growth tends to be higher in countries with a larger service sector. (v)Countries with a higher share of urban population are typically characterized by larger employment elasticities.
The optimal fiscal policy is countercyclical, aiming to keep the output close to its potential. Nevertheless, it has been pointed out that developing countries are unable to run countercyclical fiscal policies. Several researchers have attributed these sub optimal fiscal policies to two groups of arguments. (i) The limited access to domestic or external funds may hinder the ability of government to pursue expansionary fiscal policy in bad time.(ii) The second group of factors explains that sub-optimal fiscal policies are associated with institutional theories. The standard argument suggests that countries pursuing poor fiscal policies have, also, weak institutions, widespread corruption, and lack of property rights and repudiation of contract.The main goal of this paper is to analyze empirically if the ability of MENA countries to conduct countercyclical fiscal policy is affected by the quality of their institutions, the nature of political regime and/or by the availability of financial resources either on the local or international capital markets.From our fiscal policy regression, we find that government expenditure in MENA region is procyclical. We conclude that MENA countries are unable to run countercyclical fiscal policies if they have weak institutions, small access to international, domestic credit market, and democratic political regime.
This paper presents an estimation of the fiscal multipliers for Saudi Arabia, conducted by applying the local projection (LP) method. It also presents an exploration of the non-linear features of fiscal multipliers. The findings showed that (i) consistent with earlier studies, fiscal multipliers are generally moderate; (ii) the investment spending multiplier is larger in magnitude than the current spending multiplier; (iii) the non-oil revenue multiplier is negative; (iv) the output response to fiscal shocks is larger during expansions; and (v) fiscal multipliers are stronger during a contractionary fiscal policy phase.
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