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China has been moving to a more market oriented financial system, which has implications for the monetary policy environment. The paper investigates the stability of the money demand function (MDF) in light of progress in financial sector reforms that, for example, have resulted in significant financial innovation (so-called shadow banking) and more liberalized interest rates. The analysis of international experience suggests that rapid development of the financial system often leads to structural shifts in the MDF. For example, financial innovation and liberalization alter the sensitivity of

This paper assesses the extent to which Sub-Saharan Africa (SSA)â??s business cycle is synchronized with that of the rest of the world (RoW). Findings suggest that SSAâ??s business cycle has not only moved in the same direction as that of the RoW, but has also gradually drifted away from the G7 in favour of the BRICs. Trade with the BRICs turns out to be the strongest driver of this shift. Much of this impact unfolds through aggregate demand impulse from trade. As fiscal policy stances in SSA and the BRICs are not synchronized, they have not caused cyclical output correlation between these two

This paper proposes a new quality of growth index (QGI) for developing countries. The index encompasses both the intrinsic nature and social dimensions of growth, and is computed for over 90 countries for the period 1990-2011. The approach is premised on the fact that not all growth is created equal in terms of social outcomes, and that it does matter how one reaches from one level of income to another for various theoretical and empirical reasons. The paper finds that the quality of growth has been improving in the vast majority of developing countries over the past two decades, although the

This paper examines the impact of fiscal policy on employment through the lenses of Okun'sLaw. Looking at the panel of OECD countries over the past three decades, we find that fiscalpolicy can affect employment beyond the impact it is traditionally assumed to exert through theoutput multiplier. In particular, this impact is found to be effective for most items of currentdiscretionary expenditure and for corporate income taxes and social security contributions.Okun's Law is found to be stable under almost all model specifications, but higher spending on subsidies and lower social security contr

In recent years, there has been increasing interest in the impact of conflict on taxation, and a few articles have focused on aid effectiveness in conflict-affected countries. Both aid and conflict have been identified as major determinants of tax performance, however there is little agreement on the nature of their individual and joint effects on taxation. This study contributes to this debate by considering a sample of 123 developing countries over the period 1984 to 2014. Our findings show that aid granted during a period of conflict positively affects revenue collection, and this impact increases with technical assistance. A deeper analysis demonstrates a non-linear relationship between aid provided during conflict times and domestic revenue mobilization. The institutional environment appears to be a factor that may mitigate, and even reverse, the nature of the relationship between aid and revenue mobilization.

International audience ; This paper examines the cyclicality of provincial expenditure inChina duringthe period 1978–2013. Using panel data for analysis, it assesses whether provincialexpenditure has been pro-cyclical. Pro-cyclicality is found to be a regular feature ofprovincial fiscal policy. This pro-cyclicality occurs both in times of low and high growthrates and has markedly intensified since 1994 with the increased autonomy of provinces.The paper further finds that the pro-cyclicality bias is mitigated when financial constraintsare relaxed, the remaining political life of the governor is long, governmentefficiency is strong, corruption incidence is low, and governments are large.

International audience ; This paper examines the cyclicality of provincial expenditure inChina duringthe period 1978–2013. Using panel data for analysis, it assesses whether provincialexpenditure has been pro-cyclical. Pro-cyclicality is found to be a regular feature ofprovincial fiscal policy. This pro-cyclicality occurs both in times of low and high growthrates and has markedly intensified since 1994 with the increased autonomy of provinces.The paper further finds that the pro-cyclicality bias is mitigated when financial constraintsare relaxed, the remaining political life of the governor is long, governmentefficiency is strong, corruption incidence is low, and governments are large.

In recent years, there has been increasing interest in the impact of conflict on taxation, and a few articles have focused on aid effectiveness in conflict-affected countries. Both aid and conflict have been identified as major determinants of tax performance, however there is little agreement on the nature of their individual and joint effects on taxation. This study contributes to this debate by considering a sample of 123 developing countries over the period 1984 to 2014. Our findings show that aid granted during a period of conflict positively affects revenue collection, and this impact increases with technical assistance. A deeper analysis demonstrates a non-linear relationship between aid provided during conflict times and domestic revenue mobilization. The institutional environment appears to be a factor that may mitigate, and even reverse, the nature of the relationship between aid and revenue mobilization.

AbstractFew papers have attempted to assess the role of 'capacity', especially in the area of macroeconomic statistics. Consequently, we make an attempt to advance this literature through the construction of a 'statistical capacity building index' and then test its explanatory power on the cyclicality of government spending. Using panel data from 62 developing countries, we find evidence that improvements in this index are associated with less procyclicality of government spending over the period 1990–2012, with the significance of this relationship dependent upon the quality of administrative and technical capacity of budgetary institutions. Copyright © 2017 John Wiley & Sons, Ltd.