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Big Government, High Debt, and Fiscal Adjustment in Small States
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Author/Editor: |
Medina Cas, Stephanie | Ota, Rui |
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February 1, 2008 |
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Electronic Access: |
Free Full Text (PDF file size is 425KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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Summary: Using a new fiscal dataset for small states, this paper analyzes the link between country size, government size, debt, and economic performance. It finds that on average small states have larger governments and higher public debt. Although there are intrinsic factors that explain why governments are bigger in small states, those with smaller governments and lower public debt tend to grow faster and are less vulnerable. Large fiscal adjustments, primarily through expenditure restraint, can underpin growth, although sometimes other elements can also impact. Since better governance is associated with lower debt, fiscal adjustment should be supported by governance improvements.
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Order a print copy
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Series: |
Working Paper No. 08/39 |
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Subject(s): |
Governance | Fiscal policy | Public debt | Exchange rate regimes | Transparency |
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Author's keyword(s): |
Government size | debt | fiscal policy | governance | small states |
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Published: |
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February 1, 2008 |
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Format: |
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Paper |
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Stock No: |
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WPIEA2008039 |
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Pages: |
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45 |
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Price: |
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US$18.00 (Academic Rate: US$18.00 )
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