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Fiscal Stabilization & Adjustments in Developing Countries

Publication Date Jan 1, 2016

Abstract

From the literature review, it is particularly argued that failure to implement effective fiscal policy measures have greatly hampered economic growth and sound macroeconomic stability in most developing countries. The prevailing economic climate indicates that growth has slowed down substantially in most developing economies especially in sub-Saharan Africa (SSA) region. The discussion on the fold is that economic turbulence and uncertainty persist despite implementing the famous Structural Adjustments Programmes (SAPs) in the early 1980s and 1990s. Many scholars still argue that developing economies have maintained a stable and positive rate of growth while significant challenges of high real interest rates, declining investment opportunities, and volatility in exchange rates and fiscal deficit remains key on the development agenda.At the end of the 1990s, most developing economies saw a full span of macroeconomic and microeconomic measures in order to resolve structural rigidities. For obvious reasons the economic outlook of the late 1990s provided a greater opportunity for sustained economic growth in most developing economies. However, this was not the case as most of them experienced a balance of payment crisis, growing foreign debt, high interest high rates and increase in public expenditure which was caused by imprudent fiscal policies. Most governments undertook a combination of austerity measures such as cutting down of public expenditure, raising enough revenues and reducing the fiscal deficit so as to promote mac...

Concepts
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Fiscal Measures
Increase In Public Expenditure
Fiscal Austerity Measures
Positive Rate Of Growth
Volatility In Exchange Rates
Microeconomic Measures
Fiscal Stabilization
Economic Turbulence
Fiscal Deficit
Stable Rate Of Growth

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