Fiscal Prudence Research Articles

Winter is Coming: A Tale of Two Futures – Entrepreneurial State or Creative Destruction?

This paper aims to explore the fundamental principles of sound monetary policy, fiscal prudence, and entrepreneurial innovation, which have historically supported the economic prosperity of nations. It seeks to identify the factors leading to an impending financial crisis and proposes countermeasures based on market liberalization and individual entrepreneurial resilience. Using a critical analysis of prevailing economic conditions, this paper evaluates the unchecked expansion of the monetary supply, fiscal policies, and government interventions. The methodology includes a review of historical economic trends and the application of theoretical frameworks concerning monetary policy, fiscal responsibility, and market innovation. The research identifies that the unchecked expansion of the monetary supply has contributed to inflationary pressures, diminished savings incentives, and led to the misallocation of capital. In addition, fiscal looseness and increased government intervention have exacerbated these economic vulnerabilities, creating conditions ripe for an economic crisis of substantial magnitude, possibly surpassing previous crises such as the Great Recession and the COVID-19 pandemic. The paper concludes that this impending crisis is not an unforeseeable "black swan" event but rather one with clear warning signs that require immediate action. The findings advocate for a departure from interventionist policies and emphasize the importance of returning to foundational economic principles, including market liberalization and fostering individual creativity and entrepreneurial innovation. This paper serves as a timely call for policymakers to address these challenges before the full impact of the crisis is realized.

Government procurement and corporate investment efficiency: Evidence from China

This study investigates the impact of government procurement on the microeconomic landscape, particularly focusing on investment decisions and efficiency within corporations. Utilizing a dataset spanning 2015 to 2021 from A-share listed companies in China, the study examines how government contracts, as reported by the China Government Procurement website, influence corporate investment strategies. The analysis reveals that government procurement significantly enhances investment efficiency and mitigates common corporate investment deficiencies. These findings are robust, confirmed through instrumental variable techniques and validation procedures. Furthermore, the study explores the underlying mechanisms, suggesting that government procurement facilitates corporate financial fluidity and reduces environmental unpredictability. The impact is notably more pronounced in private sector entities, high-tech industries, and economically advanced regions in eastern China. This research provides empirical evidence of government procurement's efficacy as an economic instrument, highlighting its role in promoting corporate fiscal prudence. However, the study acknowledges limitations, such as potential variability in procurement practices across different regions and industries, which may affect the generalizability of the findings. Future research could explore the long-term effects of government procurement on corporate innovation and broader economic outcomes.

Cost-effectiveness and benefits of perinatal health interventions in high-income settings: A protocol for a systematic review of economic evaluations.

Despite ongoing efforts, perinatal morbidity and mortality persist across all settings, imposing a dual burden of clinical and economic strain. Besides, the fragmented nature of economic evidence on perinatal health interventions hinders the formulation of effective health policies. Our review aims to comprehensively and critically assess the economic evidence for such interventions in high-income countries, where the balance of health outcomes and fiscal prudence is paramount. We will conduct a comprehensive search for studies using databases including EconLit (EBSCO), Cost Effectiveness Analysis (CEA) Registry, Medline (Ovid), Embase (Ovid), CINAHL Ultimate (EBSCO), Global Health (Ovid), and PubMed. Furthermore, we will broaden our search to include Google Scholar and conduct snowballing from the final articles included. The search terms will encompass economic evaluation, perinatal health interventions, morbidity and mortality, and high-income countries. We will include full economic evaluations focusing on cost-effectiveness, cost-benefit, cost-utility, and cost-minimisation analyses. We will exclude partial economic evaluations, reports, qualitative studies, conference papers, editorials, and systematic reviews. Date restrictions will limit the review to studies published after 2010 and those in English during the study selection process. We will use the modified Drummond checklist to evaluate the quality of each included study. Our findings will adhere to the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) 2020 statement. A summary will include estimated costs, effectiveness, benefits, and the incremental cost-effectiveness ratio (ICER). We also plan to conduct a subgroup analysis. To aid comparability, we will standardise all costs to the United States Dollar, adjusting them to their 2022 value using country-specific consumer price index and purchasing power parity. This systematic review will not involve human participants and requires no ethical approval. We will publish the results in a peer-reviewed journal. We registered our record on PROSPERO (registration #: CRD42023432232).

New trends and directions in local government finance research: A bibliometric analysis

Local government finance has a critical impact on regional sustainability and governance. This study seeks to conduct comprehensive analyses of evolving trends and future directions in municipal finance research. It aims to address the insufficient longitudinal studies and fragmented understanding of how municipal finance practices and policies evolve by providing systematic evidence on dynamic trends and potential future trajectories. The study employed bibliometric analysis using Scopus and Google Scholar databases and Publish or Perish (PoP) software to analyze literature dynamics and associated topics and research trends and improve understanding of local government financial research. The results show a strong focus on local governance. Key themes included transparency, accountability, and financial sustainability, highlighting the critical need for good governance and fiscal prudence. The promising directions are technology (e-government) and comprehensive actions on the economic side through public-private partnerships and financial sustainability. Critical themes are fiscal stress, budgeting, and local government finance. However, new trends in sustainability, public-private partnerships, financial resilience, municipal bonds, and land finance are emerging as significant research areas. It highlights the field’s adaptability to evolving social and economic conditions. Through a thorough synthesis of these insights, stakeholders are better positioned to gain a deeper understanding of the current landscape of local government finance studies and their broader implications within a constantly changing global environment. AcknowledgmentsThe authors would like to express their sincere gratitude to the Dean of the Faculty of Economics and Business, Hasanuddin University, for their invaluable support and assistance in this research. Their unwavering commitment to advancing academic research and community service has been the key to completing this study.

Fiscal Prudence and Economic Growth in Asia: the role of Efficient Public Spending

The present research is an attempt to study the role of public sector efficiencies in determining optimal fiscal size of the governments for selected Asian countries. Studying efficiency of public spending is important because efficient government spending leads to improved provision of public services like health, education, infrastructure, and welfare initiatives. Improving public sector efficiency will help to promote transparency and accountability which reduces the chances of corruption and wastage of scarce public resources. Using the panel data for 19 developing countries for years 1996-2022, efficiency augmented optimal size of government expenditures is calculated. Pooled Mean Group technique is employed to calculate the impact of efficiency on growth maximizing levels of government total spending, government consumption spending and government investment spending. Results establish strong impact of efficiency in public expenditures on optimal fiscal size. Other variables enhancing economic growth include capital stock and trade openness, while human capital has negative effects. Public sector efficiencies are found to reduce growth maximizing size of government spending. The optimal size of government total expenditure is estimated to be 25.19 %, while optimal fiscal size for government consumption expenditure and government investment expenditure are 14.04%, and 11.18 % respectively for developing Asian countries.

Sustaining Prosperity: Exploring Fiscal and Financial Sustainability in the Context of Dynamic Fiscal Policy

Purpose: This study explores how fiscal policy and financial sustainability support sustainable economic prosperity amid global instability. It examines the impact of government taxation and spending decisions on economic outcomes, aggregate demand, employment, inflation, social welfare, infrastructure development, and income inequality. Financial sustainability is analyzed through prudent fiscal management and debt sustainability, focusing on long-term government finance viability and mitigating fiscal risks. Research Design and Methodology: The study employs a qualitative methodology, incorporating a comprehensive literature review of theoretical works, empirical studies, and policy analyses. Data is collected through systematic reviews of scholarly articles, books, policy reports, and official publications. Thematic analysis techniques, including coding and categorization, synthesize findings, with reflexivity to consider assumptions and biases. Findings and Discussion: The research underscores the importance of flexibility and adaptability in fiscal policy, highlighting automatic stabilizers and countercyclical policies for economic stabilization and sustainable growth. Prudent debt management, including debt restructuring and fiscal consolidation, is vital for mitigating fiscal risks and ensuring debt sustainability. The findings emphasize integrating fiscal sustainability with broader economic and social goals and the need for institutional reforms and international cooperation to enhance fiscal governance. Implications: The study provides insights for policymakers on the importance of fiscal prudence and sustainability. It advocates for a balanced approach that addresses short-term stabilization and long-term goals and calls for institutional reforms to improve fiscal discipline, transparency, and accountability. By integrating interdisciplinary perspectives, policymakers can develop resilient and sustainable fiscal policies that promote long-term prosperity and social equity.

Signaling to creditors and voters: the determinants of national fiscal rules

Fiscal rules are spreading fast among countries. However, why and when governments enact fiscal rules and strengthen their national fiscal legal frameworks are less well understood. This article argues that governments use fiscal rules to signal commitment to fiscal prudence to both creditors and national voters. It investigates this theoretical argument empirically by using a worldwide panel of countries from 1985 to 2015. The empirical analyses find robust evidence that fiscal rules enactment becomes more likely, and that fiscal rules stringency increases when government debt is high and in election years but less evidence that being under an IMF program increases the strength of fiscal rules.

Exploring the Economic Aspects of Hospitals: A Comprehensive Examination of Relevant Factors.

Financial limitations in the hospital industry have the potential to exacerbate healthcare disparities, impede investments in cutting-edge medical treatments, as well as impair patient outcomes. The interdependent connection between a hospital economy and the general well-being of the community highlights the necessity of careful financial oversight and inventive healthcare policies. Effective collaboration among policymakers, healthcare administrators, and stakeholders is imperative in the development of sustainable economic models that give equal weight to fiscal prudence and optimal patient outcomes. This article aims to underscore the pivotal importance of strategic fund allocation guided by hospital administrators, accentuating several key initiatives capable of revolutionizing healthcare delivery and elevating the institution's stature within the medical community. The other important aspects discussed here are fund allocation in hospitals, the boom of online consultations, and emphasis on the use of sustainable and cost-effective modalities of energy.

Well-Behaved Owners and Troublesome Tenants? How Dense Social Mixing Shapes Housing Communities and Dispels Prejudices

ABSTRACT This paper examines the kinds of boundaries laid by residents of mixed-tenure housing communities and how distinctions are rationalized. Based on interview data on a densely mixed community (both owner-occupied and social housing apartments mixed with stairwells) in Helsinki, Finland, I observe how residents outline their neighbourhood. Based on the analysis, urban anonymity was the most significant repertoire defining communal life, followed by others such as sense of home and fiscal prudence. In densely mixed settings, residents are forced to witness each other’s domestic life; thus, dense social mixing can prevent prejudices between tenure groups. The study results contribute to the understanding of cultural repertoires in hierarchical relationships vis-à-vis each other, creating varying contexts and defining the lived realities in communities. Empirically, the results question prevailing images of troublesome tenants and well-behaved owners.

지방자치단체의 비효율적 재정 운용과 도덕적 해이

Previous studies analyzing the causes and consequences of inefficient fiscal management have mainly focused on the politics of the budget process and fiscal prudence, often overlooking the relationship between inefficiency in budget execution and moral hazard, which represents inefficient fiscal management.
 This study aims to examine the relationship between inefficient fiscal management and moral hazard at the local government level, focusing on unused budget and local subsidies. It does so by collecting financial statements from local governments across the country spanning from 2017 to 2021. The increase in unused budget at the local government level can be attributed to the expansion of local governments' authority and fiscal size, which has not been met with corresponding efficient and responsible expenditure.
 Local subsidies have the positive aspect of leveraging private sector capabilities to improve business performance, but they also have a negative impact on local government integrity by leading to unproductive appropriation structures, such as unreasonable budgeting and the expansion of expenses.
 Budget wastage, including excessive unused budget and increased local subsidies, has been cited as a cause of corruption and moral hazard for many years. Therefore, for efficient resource allocation, it is essential to ensure rigor in budget formulation and budget deliberation, improve the financial expenditure structure during the budget execution stage, and maintain objectivity in the budget settlement stage.

Development Strategies during PM Vajpayee for Indian Structural Development

Since last year, 2022, India has been celebrating Amrit Kal. This is the seventy-fifth year of independence and marks the platinum jubilee celebration. In this context, it is high time to analyse the contributions of Prime Minister Atal Bihari Vajpayee, who laid a strong foundation of capacity building and structural changes in the economy. He also made the economy widely open through trade networks and foreign exchange mobilization. The purpose of the present paper is to highlight important initiatives of Vajpayee during his two terms as PM and to make the UP state and the country a very strong one. In this paper, we have focused on infrastructural change, disinvestment, and fiscal prudence. The paper is based on secondary sources of data. The trend line has been estimated based on time series data for highways. The paper concludes that the origination of the National Highway Authority of India, disinvestment in sick PSUs, and fiscal prudence are core strategies that improved the Indian economy. Needless to say, UP and Uttarakhand jointly are the biggest states in the country.

Revisiting the Twin Deficit Hypothesis in presence of exchange rate nonlinearities: evidence from India using nonlinear ARDL model

PurposeThis paper is an attempt to re-examine the validity of the Twin Deficit Hypothesis in the Indian economy, which is characterised by mounting inequality and liquidity constraints. The authors augment the econometric analysis with two important mediating variables, exchange rate and trade openness, to analyse their impact on current account deficit.Design/methodology/approachThe authors have used a ground-breaking asymmetric cointegration technique proposed by Shin et al. (2014) to investigate the short-run and long-run asymmetric nexus between gross fiscal deficit and current account deficit. In addition, the study has used asymmetric dynamic multipliers to see the dynamics of nonlinear adjustment from disequilibrium in the short run to equilibrium in the long run. The study has also used generalised impulse response functions to check the robustness of our cointegration results.FindingsUsing annual time series data from 1970 to 2018, the empirical exercise validates the presence of asymmetries in the Twin Deficit Hypothesis for the Indian economy. This study's robust findings demonstrate that the two deficits are asymmetrically related in the long run. The authors also found that exchange rate asymmetrically affects current account deficit thus validating the asymmetric J-curve phenomenon. From the causality analysis, the authors infer that there is a weak unidirectional causality running from fiscal deficit to current account deficit.Research limitations/implicationsFiscal deficit may cause current account deficit via changes in other macroeconomic variables that were not taken care of in this study. Therefore, the estimation techniques used in the present study might suffer from the issue of omitted-variable bias. Further research should include other macroeconomic variables where the twin deficit nexus is also influenced by other relevant variables. This will help in disentangling the indirect transmissions by which fiscal deficit translates into current account deficit.Practical implicationsThe results from our econometric exercise strongly suggest that the twin deficits are asymmetrically related. From a policy perspective, the asymmetric twin deficit nexus offers strong policy implications for the development of policies that are flexible enough to respond to shifts in internal and external sector dynamics. While framing the mechanism of fiscal prudence, policymakers in emerging countries like India must take into account the regime-changing behaviour of twin deficits.Originality/valueThe present paper is a significant contribution to the existing body of literature by being the first study in India which has analysed the Twin Deficits phenomenon in a nonlinear framework with the incorporation of asymmetric exchange rate dynamics in the model.

Differential impacts of fiscal consolidation policies under alternative monetary regimes: evidence from Indian economy

The study tried to examine the effects of fiscal consolidation policies under alternative monetary stances in Indian economy. Using structurally adjusted vector autoregression (SVAR) we found that both Monetary and Fiscal-policies interact in cooperative as well as competing manner depending on the type and timing of shocks. Although fiscal policy enjoys a certain degree of superiority, the potency of monetary policy has not waned away. In terms of effectiveness, the study found that the fiscal policy is a better tool of economic stabilisation in the short run but in long and medium run it may harm growth. A consolidation program aimed at infusing fiscal prudence was found to have differential impacts on economic growth depending on whether such a policy is undertaken in an expansionary or contractionary monetary regime. Ironically the fiscal-policy was found to have more influence on inflation than monetary policy pointing towards the fiscal theory of price level; FTPL.

FISCAL POLICY AND EMPLOYMENT GENERATION IN NIGERIA

<p>This paper investigated the influence of fiscal policy on employment generation in Nigeria. The analyzed data, spanning 1981 to 2020 were obtained from the statistical bulletin of Nigeria’s apex bank and the country’s Bureau of Statistics. The Error Correction Model was applied as the main analytical tool. The results showed that aggregate government expenditure has a positive but insignificant influence on the employment rate. In addition, total tax revenue and external debt service have negative and insignificant influences on the employment rate in Nigeria. What this suggests is that fiscal policy tools of aggregate government expenditure, total tax revenue and external debt service have not effectively helped to increase the level of employment in Nigeria. Generating from the findings, this paper suggested that government should maintain fiscal prudence and ensure that total tax revenue is efficiently and effectively utilized to provide infrastructural facilities and social amenities that will help the various sectors of the economy to function very well thereby generating enough employment in the country.</p><p><strong>JEL:</strong> O15; E24; J21; H60</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0954/a.php" alt="Hit counter" /></p>

Strengthening internal accountability by avoiding fantasy documents in responsibility center budgeting

AbstractHigher education scholars often investigate the policy mechanisms of external accountability, but rarely explore institutional mechanisms of internal accountability. This chapter, which reports select findings from an in‐depth case study of institutional budgeting at an American public research university, examines an underexplored mechanism of internal accountability – annual budget reviews. The findings illustrate that the university's budget review often constitutes a fantasy practice that affirms the institution's commitment to fiscal prudence as much as scrutinizes budgetary decisions in academic units. The findings reveal opportunities to strengthen budget reviews at institutions that have adopted decentralized budget models such as Responsibility Center Budgeting.

Do credit rating agencies reward fiscal prudence?

AbstractGovernments are responsible for economic policy implementation, and their actions affect financial and capital market outcomes. Specifically, the way fiscal policy is conducted matters when credit agencies have to decide on how to rate a sovereign. This paper empirically assesses the effect of a new time‐varying measure of fiscal counter‐cyclicality on the sovereign credit ratings of the main agencies: Fitch, Standard & Poor's, and Moody's. I focus on a heterogeneous sample of 63 advanced and developing economies between 1980 and 2015. First, we find that the degree of fiscal counter‐cyclicality is generally positive and has been increasing over time, being larger in advanced economies. Second, the more counter‐cyclical a fiscal policy is, the better the assessment a rating agency gives to that country, particularly if it is an advanced one. This suggests that fiscal prudence and stabilization concerns are rewarded. Our results are robust to several sensitivity and robustness checks.

What Is the Relationship between Higher Education and Neoliberalism in the United States?

What Is the Relationship between Higher Education and Neoliberalism in the United States?

Neoliberal failures and the managerial takeover of governance

AbstractThe history of neoliberalism is a messy attempt to turn theory into practice. Neoliberals struggled with their plans to implement flagship policies of monetarism, fiscal prudence, and public sector privatisation. Yet, inflation was still cut, welfare slashed, and the public sector ‘marketised’. Existing literature often interprets this as neoliberalism ‘failing-forward’, achieving policy goals by whatever means necessary and at great social cost. Often overlooked in this narrative is how far actually existing neoliberalism strayed from the original designs of public choice theorists and neoliberal ideologues. By examining the history of the Thatcher government's public sector reforms, we demonstrate how neoliberal plans for marketisation ran aground, forcing neoliberal governments to turn to an approach of Managed Competition that owed more to practices of postwar planning born in Cold War US than neoliberal theory. Rather than impose a market-like transformation of the public sector, Managed Competition systematically empowered top managers and turned governance into a managerial process; two developments that ran directly against core precepts of neoliberalism. The history of these early failures and adjustments provides vital insights into the politics of managerial governance in the neoliberal era.

PUBLIC FINANCES OF INDIA: ARE YOU SURPRISED?

Public finances in India are at a turning point. Analysis of the past data shows that no major improvement in any of the major fiscal indicators. Restructure of debt, reforms in power sector and implementation of other issues under MTFRP hold promise for future. The Centre is carefully treading the path of fiscal prudence but State finances are slipping. The main objective of this paper is to suggest restructuring of public finances of the Centre and state governments to provide macroeconomic stability, equitable growth in the country and improve efficiency of resources. The paper also suggests ways to augment revenue resources and contraction in expenditure On the contrary, other fiscal indicators have shown significant deterioration. Thus the claims about fiscal adjustment are illusory. Fiscal consolidation in India perhaps need more attention and commitment. A comparison of deficits of Centre and state are made from period 1991-92 to 2016-17.Keywords: Public Finance, India, revenue, expenditure, deficits.JEL Classifications: H1, H2, H5, H7DOI: https://doi.org/10.32479/ijefi.11732

Impact of Fiscal Prudence and Financial Development on Foreign Direct Investment Inflow: Nigerian Evidence

Foreign direct investment in a globalized and information technology driven environment, as we have today in the 21st century, acted as a driver of growth. This paper provides further evidences on macroeconomic management of FDI in emergent economies especially in Africa. The paper empirically measures the effects of fiscal prudence and financial development on foreign direct investment inflow in Nigeria. It tested the importance of household consumption, domestic credit to the private sector, fixed capital formation, domestic savings, external debt, foreign reserve and financial development for the purpose of ensuring FDI inflow in Nigeria. It findings show that domestic credit to private sector, fixed capital formation, foreign reserve and financial development are statistically significant in the case of Nigeria. The econometric methodologies followed for the study are log-linear regressions and ARDL bound testing. Data was sourced from National Bureau of statistics and World Bank’s World Development Index for the period ranging from 1985 to 2018.