Fiscal pro-cyclicality is a defining trait of many MENA countries and other emerging economies: public spending typically rises in good times and falls in bad times. This column reports research on the effectiveness of fiscal rules in countering this widespread tendency. The evidence from 120 countries over a 30-year period indicates that rules on government expenditure can reduce the pro-cyclicality of public spending by around 40% on average.
Klaus Schmidt-HebbelCatholic University, Chile
Klaus Schmidt-Hebbel is Professor at the Economics Institute of the Pontificia Universidad Católica de Chile. He was OECD Chief Economist and Head of the Economics Department. His research focuses on Development Economics, International Economics and Macroeconomics. He received his PhD. in Economics from the Massachusetts Institute of Technology.