Is Fiscal Policy Pro-Cyclical or Counter-Cyclical ? Evidence from India
DOI:
https://doi.org/10.17010/aijer/2017/v6i2/114124Keywords:
Business Cycles
, Fiscal Policy, Public Spending, EconometricsC13
, C23, E62Paper Submission Date
, November 28, 2016, Paper sent back for Revision, February 23, 2017, Paper Acceptance Date, March 21, 2017.Abstract
This study investigated the cyclicality of fiscal policy in India at the Centre, State, and combined Centre - State level by employing three alternative methods. The period of analysis extended from 1970-71 to 2013-14. In general, the study finds pro-cyclicality behavior of expenditure in case of India. Revenue expenditure, primary revenue expenditure, capital outlay, and total expenditure were found to be pro-cyclical at the Centre and combined Centre - State level. Capital outlay was found to have more pro-cyclicality as compared to other expenditure categories both at the Centre and combined Centre - State level. However, at the State level, capital outlay was not found to have any cyclical relation with output.Downloads
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