{
  "title": "Growth, Governance, and Fiscal Policy Transmission Channels in Low-Income Countries",
  "publication": "IMF Working Papers, December 1, 2003",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/growth-governance-and-fiscal-policy-transmission-channels-in-low-income-countries-16975",
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  "summary": "Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries. In low-income countries, governance and also other considerations suggest that the primary channel is factor productivity.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries.\n- In low-income countries, governance and other considerations suggest that the primary channel is factor productivity.\n- Empirical results reported in this paper confirm this expectation: in low-income countries, factor productivity is some four times more effective than investment as a channel for increasing growth through fiscal policy.\n- Although the private investment response to fiscal contraction may be minor, high-deficit, low-income countries can nonetheless benefit from a reduction in unsustainable fiscal deficits because of governance-related factor productivity responses that increase growth."
    },
    {
      "heading": "Empirical results and quantitative notes",
      "content": "- Factor productivity is \"some four times more effective than investment\" as a fiscal policy transmission channel to increase growth in low-income countries (phrase preserved as in source).\n- Pages: 39\n- Volume: 2003\n- Issue: 237\n- Series: Working Paper No. 2003/237\n- DOI: https://doi.org/10.5089/9781451875737.001\n- Stock No: WPIEA2372003\n- ISBN: 9781451875737\n- ISSN: 1018-5941\n- Publication date: December 1, 2003"
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- For low-income countries, prioritizing governance improvements that raise factor productivity can amplify the growth impact of fiscal policy.\n- Fiscal consolidation in high-deficit, low-income countries can yield growth benefits through governance-related productivity responses even if private investment responses to fiscal contraction are limited.\n- Policy design in low-income countries should account for transmission mechanisms that differ from high-income contexts; emphasis on governance-enhancing measures can change the effectiveness of fiscal adjustment.\n\nIMF Working Paper: Naoko C. Kojo, Arye L. Hillman, and Emanuele Baldacci. \"Growth, Governance, and Fiscal Policy Transmission Channels in Low-Income Countries\", December 1, 2003.\n\n---\n\n Content in this bundle\n\n- wp03237\n  - wp03237 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp03237 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/growth-governance-and-fiscal-policy-transmission-channels-in-low-income-countries-16975"
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    "Authors: Naoko C. Kojo, Arye L. Hillman, Emanuele Baldacci",
    "Published: December 1, 2003",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451875737.001",
    "Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries.",
    "In low-income countries, governance and other considerations suggest that the primary channel is factor productivity.",
    "Empirical results reported in this paper confirm this expectation: in low-income countries, factor productivity is some four times more effective than investment as a channel for increasing growth through fiscal policy.",
    "Although the private investment response to fiscal contraction may be minor, high-deficit, low-income countries can nonetheless benefit from a reduction in unsustainable fiscal deficits because of governance-related factor productivity responses that increase growth.",
    "Factor productivity is \"some four times more effective than investment\" as a fiscal policy transmission channel to increase growth in low-income countries (phrase preserved as in source).",
    "Pages: 39",
    "Volume: 2003",
    "Issue: 237",
    "Series: Working Paper No. 2003/237",
    "DOI: https://doi.org/10.5089/9781451875737.001",
    "Stock No: WPIEA2372003",
    "ISBN: 9781451875737",
    "ISSN: 1018-5941",
    "Publication date: December 1, 2003",
    "For low-income countries, prioritizing governance improvements that raise factor productivity can amplify the growth impact of fiscal policy.",
    "Fiscal consolidation in high-deficit, low-income countries can yield growth benefits through governance-related productivity responses even if private investment responses to fiscal contraction are limited.",
    "Policy design in low-income countries should account for transmission mechanisms that differ from high-income contexts; emphasis on governance-enhancing measures can change the effectiveness of fiscal adjustment.",
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