Jeffrey Frankel, Carlos A. Vegh , Guillermo Vuletin, 23 June 2011
With the ongoing financial turmoil in Europe, many emerging market countries are now deemed less risky than so-called âadvancedâ countries. This column examines why this is the case and finds that the cyclicality of a countryâs fiscal policy â a sign of its riskiness â is inversely correlated with the quality of the countryâs institutions.
Full Article: How developing nations escaped procyclical fiscal policy
With the ongoing financial turmoil in Europe, many emerging market countries are now deemed less risky than so-called âadvancedâ countries. This column examines why this is the case and finds that the cyclicality of a countryâs fiscal policy â a sign of its riskiness â is inversely correlated with the quality of the countryâs institutions.
Full Article: How developing nations escaped procyclical fiscal policy