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Does ethnic diversity hurt fiscal sustainability?

Author

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  • Abu Bakkar Siddique

    (Schar School of Policy and Government, George Mason University)

Abstract

This paper suggests that ethnically heterogeneous societies are collectively careless about fiscal sustainability. It provides fresh evidence about the impact of ethnic diversity on fiscal governance, specifically on public spending, revenue, and debt. The findings based on a two-way fixed effect (FE) estimation for a balanced panel dataset suggest that rising ethnic diversity in the U.S. generates higher public debt per capita and fiscal indiscipline, which are mainly driven by lower contributions to public revenue while maintaining enduring public spending. Ethnically fragmented states also receive smaller intergovernmental revenue which also hurts fiscal balances.

Suggested Citation

  • Abu Bakkar Siddique, 2021. "Does ethnic diversity hurt fiscal sustainability?," Economics Bulletin, AccessEcon, vol. 41(2), pages 532-543.
    • Handle: RePEc:ebl:ecbull:eb-20-01098
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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I2-P47.pdf
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    References listed on IDEAS

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    Cited by:

    1. Abu Bakkar Siddique & Kingsley E. Haynes & Rajendra Kulkarni & Meng-Hao Li, 2023. "Regional poverty and infection disease: early exploratory evidence from the COVID-19 pandemic," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(1), pages 209-236, February.

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    More about this item

    Keywords

    Ethnic diversity; fiscal disciplines; public debt; public revenue; public expenditure; intergovernmental transfers;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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