What is Vulnerable During Fiscal Retrenchment?

Authors: Fardmanesh, M.¹; Habibi, N.²

Source: Economics and Politics, Volume 12, Number 1, March 2000 , pp. 83-108(26)

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Abstract:

Using data for 70 countries in the 1980s, this study investigates the impact of socioeconomic and political characteristics of a country on the vulnerability of expenditure categories during budget cuts. Greater democracy is associated with less vulnerability of the social and productive sectors and with more vulnerability of the administrative/defense, infrastructure, and miscellaneous sectors. Political instability reduces the vulnerability of the social, administrative/defense, and miscellaneous sectors and increases that of the productive sector. Fiscal federalism increases the vulnerability of the infrastructure and administrative/defense sectors and reduces that of the productive sector. The relative size of the budget cuts is also a determining factor.

Document Type: Original article

DOI: http://dx.doi.org/10.1111/1468-0343.00070

Affiliations: 1: Department of Economics, Temple University, 2: Department of Economics, Yale University

Publication date: 2000-03-01