This note explores the link between the effort level to strengthen institutional quality and the nature of the fiscal policy game among interdependent economies plagued by corruption. Every country has a lower incentive to improve public governance when the effort made abroad to remedy...

This paper aims to explain why fiscal multipliers are generally low, even close to zero, in emerging economies (EMEs). Our explanation jointly relies on the behavior of the exchange rate following a fiscal shock and on the proportion of external debt denominated in foreign currency, which is...