Fiscal Discourse and Fiscal Policy

IMF Working Papers, September 16, 2024

Source details

Authors: Yongquan Cao, Era Dabla-Norris, Enrico Di Gregorio
Publication date: September 16, 2024
Format: IMF Working Papers, Working Paper No. 2024/194
Scope: Analysis leveraging thousands of electoral platforms from 65 countries in the Manifesto Project to link how political parties discuss fiscal policy with fiscal outcomes.

Rising pro-spending discourse:
- Fiscal discourse has become increasingly favourable to higher government spending since at least the 1990s in advanced and emerging economies and across the political spectrum.
- This upward trend in party discourse does not track survey trends in voter preferences, suggesting parties have played a role in shifting the focus of political campaigns to fiscal issues to win over voters.
Conditional conservatism:
- Fiscal discourse turns conservative under more adverse fiscal conditions, including in the aftermath of debt surges and after the adoption of fiscal rules, but only to a limited extent.
Medium-run fiscal effects:
- Over the medium-run, relative discourse changes in favor of government expansion and away from fiscal restraint are followed by higher fiscal deficits.
Overall implication:
- Together, the results suggest that adverse shifts in the supply of fiscal ideas could add to fiscal pressures over time.

Subject: Emerging and frontier financial markets, Expenditure, Financial markets, Fiscal policy, Fiscal rules, Government debt management, Public debt, Public financial management (PFM)
Keywords: Elections, Emerging and frontier financial markets, expansion discourse, Fiscal Discourse, Fiscal Policy, Fiscal rules, Global, Government debt management, IMF working paper No. 2024/194, Manifesto, survey trend, trend increase