We show that some types of fiscal rules can mitigate the well-known procyclical bias in public capital expenditures. Past research has found that fiscal adjustment episodes coincide with large public investment cuts, a pattern we also document in a sample of 75 advanced and emerging economies...

This paper surveys the recent literature on fiscal sustainability, with particular emphasis on emerging market countries. It discusses the main elements that differentiate emerging market countries from industrial countries and then discusses how probabilistic models can help to evaluate fiscal...

We offer an alternative explanation for the fall of Argentina's Convertibility Program based on the country's vulnerability to Sudden Stops in capital flows. Sudden Stops are typically accompanied by a substantial increase in the real exchange rate that breaks havoc in countries that are heavily...

This paper studies whether changes in the composition of public spending affect the macroeconomic consequences of fiscal consolidations. Results based on a sample of advanced and developing countries show that while fiscal consolidations tend to be contractionary on average, the size of the...

This paper surveys the recent literature on fiscal sustainability, with particular emphasis on emerging market countries. It discusses the main elements that differentiate emerging market countries from industrial countries and then discusses how probabilistic models can help to evaluate fiscal...