Government Fiscal Policy Research Articles

How Do the Remittance Outflows React to Economic Development in Saudi Arabia? Evidence from NARDL

This research aims to examine the effects of remittance outflows on Saudi’s non-oil economic growth (NOGDP). While few studies have examined the effects of remittance outflows on remitting countries’ economic development, none have looked into the asymmetric impact on Saudi Arabia’s non-oil economic growth. This research fills the gaps by looking at the uneven effects of remittance outflows on Saudi NOGDP from 1990 to 2020. The empirical estimation is based on the NARDL (Nonlinear Autoregressive Distributed Lags) method. The results show that remittance outflows have a considerable positive effect on Saudi NOGDP, indicating its economic benefit. We found that the government’s current and capital expenditures have statistically significant positive impacts on NOGDP in the long and short runs. Consequently, several policy insights could be considered to maximize the effectiveness of government fiscal policy in supporting non-oil sector development. The positive effect of remittance outflows on Saudi economic growth could be the vital role of the imported high-skilled and productive labour force in developing the non-oil private sector. The positive influence of remittances on Saudi economic growth is essential for policymakers who have to undertake a unique Saudi policy to diversify the labour market and encourage local consumption and investment spending by international workers.

The Effectiveness of Law No. 2 of 2020 concerning the Fiscal Policy Strategy of the Government of the Republic of Indonesia in Dealing with the Impact of the Covid-19 Pandemic

This study aimed to analyze the effectiveness of Law No. 2 of 2020 as a fiscal policy strategy set by the government of the Republic of Indonesia in dealing with economic problems emerging driven by the Covid-19 pandemic. A total of eight people were informants of this study. Data were collected through observation, interviews, and documentation. The stages of data analysis were collecting, reducing, and presenting the data, followed by concluding. The novelty of this research is shown by the disclosure of the effectiveness of Law No. 2 of 2020 as a government fiscal policy strategy in overcoming the impact of the COVID-19 pandemic. The results showed that three functions, namely convenience, stability, and change, are dimensions of the regulatory function of the law in question, which can have a positive impact on restoring economic activities during the Covid-19 pandemic. The law, including as one of the national economic recovery programs, can be said to be effective during the pandemic.

Strategic Capabilities and Performance of Kenya Revenue Authority, Kenya

Resources endowment in an organization provides platform for competitive advantage. Thus, there is need for all corporations to evaluate their assets and skills and align them with sole purpose of transforming and achievement of organization goals and objectives. The government budget deficit or surplus magnitude has been the most likely single most important indicator used to assess the influence of government fiscal policy on an economy. This has been partly attributed to the various governments desire in positively responding to the ever changing demands of the clients and at the same time enhancing accelerated economic development and economic. Hence, this study sought to examine the effect of firm performance; a case of Kenya Revenue Authority. The study specifically focused on how marketing capabilities, market sensing capabilities, information technology capabilities and management capabilities influenced performance. The study was based on resources-based view and information technology diffusion theory. A descriptive research design was used. Target population comprised of 842 tax compliance officers. Stratified sampling was used to select 123 respondents from Nairobi region. Pilot testing was carried out in Thika sub County Kenya Revenue Authority offices among 12 compliance officers. Primary data was collected through issue of questionnaires among compliance officers. Reliability will be tested through use of Cronbach Alpha coefficient. Descriptive statistics that include mean, frequency, percentage and inferential statistics and standard deviation including regression and correlation analysis analyzed the data. The study discovered a positive and significant influence of marketing capabilities, market sense capabilities, information technology capabilities and management capabilities on performance. The study concluded that the organization with a strong marketing capability will enable the firm to achieve better targeting and positioning its brands relative to competing brands. According to the findings, the study concluded that the capacity to market sense has a favorable and significant impact on the quality of market entry, having information communication capabilities allows a company to acquire unique access to client information and preferences while also lowering future business search costs, management capacity is critical in inspiring employees to work harder, developing channels for bilateral communication, and allowing for employee engagement, recommendations, and criticism. The study recommended that the company should improve its marketing capabilities in key functional areas. The businesses improve their market sensing abilities by first comprehending each phase of their process, then critically reviewing their market learning capability, and then rectifying any learning deficiencies. The company's business performance can be improved by exploiting its information technology capabilities to generate revenues, lower expenses, or do both. Managers must ensure that employees are aware of the forces driving change, that they are included in the planning process, and that they are aware of how to work

Does Government Fiscal Policy in Ghana Asymmetrically Affect Growth?

Using ARDL and NARDL approaches, this study examines whether government fiscal policy symmetrically or asymmetrically impact economic growth in Ghana from the period 1988 to 2018. The study outcome reveals that fiscal policy variables used exhibited long-run cointegration with economic growth for both ARDL and NARDL models. Government tax revenue, expenditure and labour showed a strong positive and significant impact on economic growth whilst capital had a significant but inverse effect on economic growth in the long-run for ARDL. NARDL model shows that positive shocks of government tax revenue exerted much impact on growth rate compared to its negative shocks in both long and short run. Estimations form the long-run suggested that positive shocks of government expenditure increase growth rate whereas the negative shocks decrease growth. The Granger test, from the NARDL model, showed a Uni-directional causation moving from LNEXP_NEG→LNGDP, LNTR_NEG→LNGDP, LNTR_POS→LNGDP while a bi-directional causality is recorded for LNEXP_POS→LNGDP and LNLAB→LNGDP. In the ARDL model bi-directional causality is recorded from LNEXP→LNGDP, LNTR→LNGDP and LNLAB→LNGDP. The research then concludes with a strong asymmetric relationship between fiscal policy and economic growth. Recommendations raised are that government should avoid raising taxes but should look for policies that will help widen its tax revenue base and in financing projects government should avoid unproductive projects that do not yield economic growth.

Ranking Season: Combating Commercial Banks' Systemic Discrimination of Consumers

The recent disbursement of COVID‐19 pandemic‐related federal relief funds to businesses and individuals under the CARES Act exposed significant problems in the U.S. system of money and payments. U.S. banks' wealth maximization objectives clashed with the federal government's goals of diversity, equity, and inclusion (DEI). The discriminatory, self‐interested behavior of banks, which essentially served as the federal government's long arm in these transactions, worsened the pandemic‐induced economic crisis for many, especially women and minorities, and intensified racial injustice. The U.S. government's inability in 2020 to successfully execute its stimulus plan and give all its intended recipients the benefits it had designated due to the role played by banks begs the question: Should U.S. banks be subject to any legal obligations when they help the government execute its fiscal goals? This article argues that U.S. banks should help advance the federal government's fiscal policy, including the DEI social agenda, especially during critical junctures such as the economic crisis instigated by COVID‐19, and proposes an agency theory approach to mandate the implementation of government social policy goals among commercial banks via a CAMELS rating‐like system that includes social goals, such as DEI. This DEI rating system would create public consequences for noncomplying banks, including depositors withdrawing their funds from lower‐rated banks and redepositing them in top‐rated banks, resulting in higher‐rated DEI banks overtaking lower‐rated banks. This DEI rating system will also provide an incentive for banks to compete for more diversity and inclusion, which would solve many of the systemic discrimination‐related issues that led to economic inequality and intensified the 2020–2021 crisis. Lastly, DEI‐based scores could help prevent banks from finding themselves on the losing side of the growing public banking movement in the United States, enabling banks to reposition themselves and avoid future radical changes in the banking industry.

Government Allocation and Economic Growth: An Empirical Evidence from States in Malaysia

Academic researchers are still interested in government fiscal management and its economic consequences. The impact of federal government fiscal policy on the economy has gotten a lot of attention. Nonetheless, little is known about state-level fiscal management. The main goal of this research is to investigate the relationship between state government fiscal and economic growth across Malaysia's states. We also investigate the economic impact of the federal government's contribution on each state's budget allocation. We identified disparities in federal funding. We use a panel dataset that spans 13 Malaysian states and ten years, from 2008 to 2017. We found that government spending drives growth in domestic products for most state governments using the panel autoregressive distributed lag (ARDL) model. The Granger causality test reveals that state government spending and federal allocation to states significantly impact Malaysian state economic growth. In general, our empirical evidence backs up Wagner's theory.

Complex dynamics and optimal control of monetary policy in a New Keynesian model with government debt

One of the central tasks of macroeconomic analysis is forecasting and control of economic agents’ expectations for key macroeconomic indicators such as inflation, gross domestic product (GDP), prices and others, etc., so that to achieve maximum level of their welfare through monetary and fiscal policy. This problem is solved within the framework of the optimal control theory using New Keynesian (NK) models that can demonstrate complex behavior, including periodic and chaotic dynamics, even in conditions of dynamical economic equilibrium. Revealing the economic mechanism for the emergence of such irregular dynamics can improve forecasting behavior of the model of the economy and stabilize undesirable dynamics. We consider this complex mechanism from two sides. First, we analyze how various monetary and fiscal policy regimes, active as well as passive, stimulate the emergence of different types of dynamics, both locally determinate and explosive ones, using the NK model with government debt as an example. Second, we clarify how government debt affects optimal monetary policy. A non-trivial backward integration algorithm is implemented to identify the initial state of the model, which leads to optimal dynamic equilibrium and the achievement of targeted values of key macroeconomic indicators.

An Empirical Analysis of the Effectiveness of Government Fiscal Policies in Promoting Sustainable Economic Growth in India

An Empirical Analysis of the Effectiveness of Government Fiscal Policies in Promoting Sustainable Economic Growth in India

Investigating the monetary and fiscal policy regimes dominance for inflation determination in Nigeria: a Bayesian TVP-VAR analysis

Investigating the monetary and fiscal policy regimes dominance for inflation determination in Nigeria: a Bayesian TVP-VAR analysis

Investigating the monetary and fiscal policy regimes dominance for inflation determination in Nigeria: a Bayesian TVP-VAR analysis

Investigating the monetary and fiscal policy regimes dominance for inflation determination in Nigeria: a Bayesian TVP-VAR analysis

ZAKAT: Government Fiscal Policy Instruments in the Covid-19 Pandemic

This study is a literature research that uses qualitative methods, the data is presented in a narrative and focuses on the direction of the description. Sources of data come from primary and secondary data sources. This study focuses on an overview of zakat in Islamic economics and zakat in Indonesian legal policy in order to find out zakat from the perspective of Islamic economics and law in Indonesia. Instruments of fiscal policy in Indonesia to determine the fiscal policy of the Indonesian government. The relevance of zakat as an instrument of fiscal policy in Indonesia during the covid-19 pandemic to find out the potential of zakat as a government policy instrument in the covid-19 pandemic. The results of the study are zakat in Islamic economics including: source of state revenue while in Indonesian law it is not included in the state budget. The reflection of the Indonesian government's fiscal policy is the APBN. Zakat has great potential, role and benefits as an instrument of government fiscal policy in dealing with the Covid-19 pandemic. Modern management and laws are still needed to maximize zakat collection.

Fiscal policy and private investment in developing economies: Evidence from Ethiopia

Private investment is one of the major channels through which fiscal policy affects economic growth of a country. Endogenous growth theory for instance recognizes the effect of fiscal policy on economic growth through its impact on private investment although the impact varies with the type of fiscal policy instruments employed. Considering the significant role of fiscal policy on the development of private sector investment, this study has attempted to assess the effect of fiscal policy on private investment in developing economies by using evidence from Ethiopia. The study implemented a modified flexible accelerator model as a theoretical framework to explain the relationship between the study variables. The study applied the ARDL model to estimate the parameters. The study result revealed that disaggregated fiscal policy measures have a diverse effect on private investment. Specifically, government fiscal policy reforms and import duties have a significant crowding in effect while capital expenditure, recurrent expenditure and budget deficit have a crowding out effect. The study finding implies that government should have to reconsider its capital and recurrent expenditure in a way that positively contributes to the development of private investment.

Illicit financial outflows, informal sector size and domestic resource mobilization in selected African countries

PurposeThe growth of both the informal sector and illicit financial outflows necessitated this study, in order to investigate how countries in Africa respond to these realities in terms of mobilization of domestic resources. These are the main motivation for the current study to the extant literature in conjunction with the adoption of employing second-generation econometric techniques which take into account cross-sectional dependence and country-specific heterogeneity.Design/methodology/approachThis study therefore examined the capacity of Africa to mobilize domestic resources amidst rising illicit financial outflows and informal sector size in selected African countries between 2000 and 2018. Second-generation econometric techniques such as cross-sectional dependence tests, slope homogeneity tests, Westerlund (2007) long-run co-integration tests, Eberhardt and Teal (2010) augmented mean group estimations and Kónya (2006) panel causality testing were employed.FindingsFindings revealed the existence of cross-sectional dependence and slope homogeneity in the data series. Findings also supported the existence of depressing long-run impacts of IFOs and ISS on domestic savings. Causality test results were not uniform across variables among countries. Policy recommendations favour formalizing the largely informal African economies through budgetary policy adjustments and commitment to building stronger institutions.Practical implicationsThe fragility of the African countries economy and its macroeconomic indicators is suggestive for more policy construction.Originality/valueThis economic reality about the nature of the informal sector is one that has negated the traditional view which holds that economic reforms would make the informal sector shrink as it transits to formal sector. Experiences from Latin America and Africa in fact indicate that the informal sector is actually on an expansionary path in the wake of adjustment and policy reforms. It is often called the unobserved, unorganized or unprotected economy. With this sector growing in size, the possibility of a reverse may not be in sight, owing to the increasing poverty levels and unemployment prevalent in most African countries. Uncertain foreign investment and aid inflows coupled with lower export revenues and high levels of indebtedness have created new impetus to examine the capacity of Africa's fiscal policy regime to mobilise domestic resources for the development of the region. Surprisingly, the last decade witnessed continued rise in Africa's illicit financial outflows amidst large informal sector size (ISS).

A system dynamics model of green innovation and policy simulation with an application in Chinese manufacturing industry

Green innovation is fundamental for the achievement of a "win-win" state between economic growth and environmental protection. Pivotal to maintaining the vitality of green innovation is the effectiveness of government policies. First, this paper develops a theoretical model to capture the structure of a green innovation system, incorporating five subsystems: government, environment, technology, economy, and energy subsystems. It further explores the transmission effects of the five subsystems of green innovation systems between government policy-related actions and green innovation. Second, a causal loop diagram of green innovation is constructed to analyse how government fiscal, tax, financial, technical, and environmental policies influence green innovation through these subsystems and other relevant variables. Third, taking the Chinese manufacturing industry as an example, this work builds a stock and flow model that can more clearly reflect the relationships among all variables in a green innovation system. Then, it calculates the quantitative relationship between different variables in the model. Model effectiveness is verified by historical data and sensitivity analysis. Finally, based on the above work, this study simulates the evolution of the green innovation system in the Chinese manufacturing industry by changing the variables of fiscal, tax, financial, technical, and environmental policies. The results show that different types of policies and differentiated implementation strengths have varied impacts on the green innovation performance of the manufacturing industry. There is a synergistic relationship between different types of policies, implying a higher-level effectiveness of policy orchestration compared to the use of separate policies. This paper generates valuable implications for the government for formulating and optimizing green innovation policies.

Monetary Policy Literature in the History of Islamic Economic Thinking

One of the Government's strategies is to promote the welfare aspect of the community's economic life. Economic development can be carried out with various strategies. One of them is empowering the wealth of natural resources that have been created by God. The government can open mines of gold, silver, coal, kerosene, gas, tin, etc. that are stored in the bowels of the earth as a form of natural empowerment. From another dimension, to maximize the ability of the economy, the government can make monetary and fiscal policies. In this paper, the author will explain how the government's monetary and fiscal policies in economic empowerment. Broadly speaking, the Islamic version of monetary policy is different from the non-Islamic version of monetary policy. This article focuses on the discussion of monetary policy in the history of Islamic economic thought, which will discuss how monetary policy was carried out in the early days of Islamic rule, starting from the time of the Prophet, his companions, to classical and contemporary economic thinkers. The explanations and descriptions that will be presented in this article can provide benefits both theoretically and practically regarding monetary policy in classical civilization, and its suitability for the present. The method used in writing this article uses a literature review approach, is used to collect relevant information related to monetary policy in the history of Islamic economic thought, secondary data in this article is collected from various research reports in order to obtain an explanation more comprehensive. The impact of monetary policy on the economy at the beginning of the Islamic Government was seen by the increasing demand for Aggregate Demand from the community after moving to Medina by bringing together muhajirin and ansar. With this brotherhood, each ansar is responsible for the muhajirin so that the distribution of income from ansar to muhajirin increases and has an impact on increasing the total demand of the community and resulting in an increase in resources, labor, land and capital. Keywords: Monetary, Policy, Islam, Economy, Development.

Neutrosophic Statistics in the Analysis of the Causes of Tax Evasion

. In Ecuador, taxes have become one of the main sources of public income after the fall in oil prices. That is why it is important to integrate tax policies and tax compliance with the taxpayer since it is considered essential in the State's development plans. On the other hand, the payment of taxes constitutes one of the main mechanisms to maintain and strengthen the government fiscal policy and, in some cases, the main source of economic resources that allow the State to conserve and improve the levels of public funds. Unfortunately, citizens have difficulty filing taxes, and that is due to the lack of tax culture. This paper is developed through a neutrosophic statistical analysis to determine the possible causes of non-compliance with tax obligations. Currently, the breach of formal duties continues to be part of the usual procedure of taxpayers for which it is necessary to analyze its causes. It is a process that involves indeterminacy; hence it will be better treated with a neutrosophic approach.

R&D-based economic growth in a supermultiplier model

We investigate how economic growth in a demand-driven economy with semi-endogenous productivity growth can be compatible with a stable employment path. Our model uses a Sraffian supermultiplier (SSM), and we endogenize the growth rate of autonomous demand, and semi-endogenize productivity growth. The basic model has a steady state that is consistent with a stable employment rate, and in which the growth rate is determined by R&D expenditures. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that ensures that demand keeps up with productivity growth and that the growing economy is stable. We also introduce a version of the model where the burden for stabilization falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.

Anteseden Pertumbuhan Ekonomi: Pendapatan atau Belanja Daerah?

Productive spending is an indication for capital spending efficiency in line with increasing in PAD and economic growth. Therefore, it is important to know the movement pattern of revenues and expenditures to accelerate welfare transfer’s to the community. This study aims to measure the role of capital expenditure and non-transfer income to encourage the rate of economic growth as a control form over local government fiscal policy. 88 data for 2015-2018 period in 22 districts/cities in NTT. Results show support for H0 for the relationship between capital spending and economic growth and PAD that is not in line with the spend-revenue hypothesis. While PAD shows an effect on the rate of economic growth but does not become the interaction variable required in the relationship. The results of the study contribute to government in strengthening regional spending capacity as a form of spending efficiency and exploring regional revenues to reduce fiscal dependence and for central government as transfer funds evaluation to achieve national development goals. Theoretically, the results studied support previous research on the relationship between PAD and economic growth but not on the relationship between capital expenditures and economic growth and the ability of PAD as an interaction variable. Limitation in this study is the determination relationship direction between variables without sample considered and there is only an interaction variable.

Youth Employment Creation Factors in the EA Countries Data and Policy Analysis

This policy research paper analyses employability factors contributing to youth unemployment and also provides working recommendations for further dialogue and engagement on youth employability in the EA countries. The data and policy analyses are based on the theory of 4-Es as propounded by International Labour Organization and Youth Employment Network literature. The field research survey, focus group discussion, combined observational and consultations with key informants were major research methods used in collecting secondary and primary data and other information. Data analysis used non-parametric methods, mainly frequency, and cross tabulations.
 The study found that the governments and private sectors have not created adequate, remunerative and sustainable job opportunities to match with increasing labour force within the country through effective utilization of natural resources available and improvement of production technology within the region. Diversification of the economy is limited. The government fiscal policies and other systems have not been effective in reducing unemployment for both youths with ought and with disability.
 The paper recommends optimal employment creation conditions. The proposed implementation strategies include creation of pro-economic growth job opportunities; diversification of the economy; creation of the environment conducive for fiscal policies adjustment; increasing participation of youth with disabilities in the job planning process and strengthening the institutional capacities.

Government Expenditure and its Effect on the Industrial Sector in Nigeria

This study examined the effect of government expenditure on the growth of the industrial sector in Nigeria. A regression analysis was applied in the analysis of the data. The study found that government capital expenditure has positive and significant effect on the industrial sector; tax has positive and significant effect on the industrial sector; monetary policy rate has positive and significant effect on the growth of the industrial sector, while real interest rate has a negative and no significant effect on the growth of the industrial sector. From the findings, we conclude that government policy has significant effect on the growth of the Nigerian industrial sector. It recommends that government fiscal policies such as public expending should be directed toward improving the quality of infrastructures in the country, especially the power sector, so that the cost of production can reduce. Government should examine should create an enabling environment with the right infrastructure, improve the security situation and reduce the epileptic power supply related issues. Also, government should examine its monetary policy variables such as interest rate and monetary policy rate. Furthermore, to promote growth, government should develop the industrial sectors of the economy through its capital expenditure.