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What is Vulnerable During Fiscal Retrenchment?

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  • M. Fardmanesh
  • N. Habibi

Abstract

Using data for 70 countries in the 1980s, this study investigates the impact of socioeconomic and political characteristics of a country on the vulnerability of expenditure categories during budget cuts. Greater democracy is associated with less vulnerability of the social and productive sectors and with more vulnerability of the administrative/defense, infrastructure, and miscellaneous sectors. Political instability reduces the vulnerability of the social, administrative/defense, and miscellaneous sectors and increases that of the productive sector. Fiscal federalism increases the vulnerability of the infrastructure and administrative/defense sectors and reduces that of the productive sector. The relative size of the budget cuts is also a determining factor.

Suggested Citation

  • M. Fardmanesh & N. Habibi, 2000. "What is Vulnerable During Fiscal Retrenchment?," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 83-108, March.
    • Handle: RePEc:bla:ecopol:v:12:y:2000:i:1:p:83-108
    DOI: 10.1111/1468-0343.00070
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    Cited by:

    1. Fosu, Augustin Kwasi, 2007. "Fiscal Allocation for Education in Sub-Saharan Africa: Implications of the External Debt Service Constraint," World Development, Elsevier, vol. 35(4), pages 702-713, April.

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