## Fiscal Stabilization and Growth: Evidence from Industry-level Data for Advanced and Developing Economies

_IMF Working Papers, September 5, 2017_

## Source details

**Canonical URL:** [Fiscal Stabilization and Growth: Evidence from Industry-level Data for Advanced and Developing Economies](https://www.imf.org/en/publications/wp/issues/2017/09/05/fiscal-stabilization-and-growth-evidence-from-industry-level-data-for-advanced-and-45183)

## Other formats

- [Markdown version](/en/publications/wp/issues/2017/09/05/fiscal-stabilization-and-growth-evidence-from-industry-level-data-for-advanced-and-45183/index.md)
- [Structured JSON version](/en/publications/wp/issues/2017/09/05/fiscal-stabilization-and-growth-evidence-from-industry-level-data-for-advanced-and-45183/index.json)
- [Bundle manifest](/en/publications/wp/issues/2017/09/05/fiscal-stabilization-and-growth-evidence-from-industry-level-data-for-advanced-and-45183/bundle-manifest.json)

## Bibliographic details
- Authors: Sangyup Choi, Davide Furceri, João Tovar Jalles
- Published: September 5, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484316726.001

---

### Summary
- Medium-term growth can be enhanced by fiscal stabilization.
- This paper examines the effect of fiscal stabilization on industrial growth and how this effect depends on different technological characteristics.
- Authors: Sangyup Choi, Davide Furceri, João Tovar Jalles.
- Date: September 5, 2017.
- Format: IMF Working Papers.

### Methodology
- Empirical approach: difference-in-difference.
- Dataset: an unbalanced panel of 22 manufacturing industries for 55 advanced and developing economies over the period 1970-2014.
- Dependent and independent variables: industry-level growth outcomes interacted with measures of fiscal stabilization and technological characteristics (as described in the paper).

### Key findings
- Fiscal stabilization fosters growth in industries with:
  - higher external financial dependence and lower asset fixity;
  - higher degree of labor intensity;
  - higher investment lumpiness and relationship-specific input usage.
- These effects tend to be larger during economic recessions.
- Results are robust to different measures of fiscal stabilization and the inclusion of various interactions between a broad set of macroeconomic variables and production technologies.

### Subjects and keywords
- Subject: Depreciation, Fiscal policy, Fiscal stabilization, Labor, National accounts, Production, Productivity.
- Keywords: aggregate demand, asset fixity, baseline result, capital depreciation, dependent variable, Depreciation, developing economy, differential effect, effect of fiscal stabilization, external finance, fiscal stabilization, Global, growth, industry-level data, interaction effect, option-value effect, Productivity, technologies of production, time varying coefficients, WP.

---

## Content in this bundle

- **wp17198**
  - [wp17198 (Markdown version)](/-/media/files/publications/wp/2017/wp17198.pdf.md){rel="alternate" type="text/markdown"}
  - [wp17198 (PDF)](/-/media/files/publications/wp/2017/wp17198.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2017/09/05/fiscal-stabilization-and-growth-evidence-from-industry-level-data-for-advanced-and-45183_