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Private investment is the principal transmission channel through which fiscal policy affects growth in high-income countries. In low-income countries, governance and also other considerations suggest that the primary channel is factor productivity. Empirical results reported in this paper confirm this expectation: in low-income countries, factor productivity is some four times more effective than investment as a channel for increasing growth through fiscal policy. Although the private investment response to fiscal contraction may be minor, high-deficit, low-income countries can nonetheless benefit from a reduction in unsustainable fiscal deficits because of governance-related factor productivity responses that increase growth.

Fiscal policy --- Production (Economic theory) --- Microeconomics --- Supply and demand --- Demand (Economic theory) --- Supply-side economics --- Developing countries --- Economic policy. --- Investments: General --- Public Finance --- Fiscal Policy --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- National Government Expenditures and Related Policies: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Public finance & taxation --- Macroeconomics --- Government debt management --- Expenditure --- Private investment --- Government debt planning --- Debts, Public --- Expenditures, Public --- Saving and investment

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This paper examines possible ways for a developing country to finance budget deficits from domestic resources. It does so by analyzing Pakistan's National Savings Scheme (NSS). The NSS has a number of unusual attributes, and its impact upon the economy of Pakistan is not clear, but given Pakistan's chronic fiscal difficulties, the NSS is of great importance in financing the public sector deficit. We use an econometric model to analyze the relationship between the demands for NSS deposits and various other financial instruments, in particular, bank deposits, and foreign-currency deposits. We conclude that NSS and bank deposits are net substitutes, as are NSS and foreign-currency deposits. Bank deposits and foreign-currency deposits, however, seem to be neither substitutes nor complements. Also, the estimated income elasticity of the demand for bank deposits is negative, while that of foreign-currency deposits is positive, and that of NSS is not significantly different from zero. Finally, there is evidence that foreign-currency deposits are a net substitute for NSS deposits. Thus, there is some empirical evidence that foreign currency deposits have absorbed part of the demand for NSS deposits. Accordingly, the availability of foreign-currency deposits may have reduced the ability of the government to finance itself.

Banks and Banking --- Budgeting --- Macroeconomics --- Public Finance --- Financial Markets and the Macroeconomy --- Fiscal Policy --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Debt --- Debt Management --- Sovereign Debt --- National Budget --- Budget Systems --- Macroeconomics: Consumption --- Saving --- Wealth --- Banking --- Public finance & taxation --- Budgeting & financial management --- Bank deposits --- Government debt management --- Budget planning and preparation --- Government debt planning --- Private savings --- Financial services --- Public financial management (PFM) --- National accounts --- Banks and banking --- Debts, Public --- Budget --- Saving and investment --- Pakistan

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The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

Finance: General --- Macroeconomics --- Taxation --- Environmental Conservation and Protection --- Natural Resources --- Climate --- Natural Disasters and Their Management --- Global Warming --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- General Financial Markets: General (includes Measurement and Data) --- Nonrenewable Resources and Conservation: General --- General Aggregative Models: General --- Climate change --- Environmental management --- Public finance & taxation --- Finance --- Climate policy --- Economic recession --- Economic growth --- World Economic Outlook --- International trade --- Trade balance --- Trade deficits --- Trade policy --- Public debt --- Domestic debt --- Government debt management --- Government debt planning --- Debt management policies --- Debt reorganization --- Carbon tax --- Non-renewable resources --- Emerging and frontier financial markets --- Greenhouse gas emissions --- Environmental impact charges --- Natural resources --- Financial services industry --- Greenhouse gases --- Climatic changes --- United States

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The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

Finance: General --- Macroeconomics --- Taxation --- Environmental Conservation and Protection --- Natural Resources --- Climate --- Natural Disasters and Their Management --- Global Warming --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- General Financial Markets: General (includes Measurement and Data) --- Nonrenewable Resources and Conservation: General --- General Aggregative Models: General --- Climate change --- Environmental management --- Public finance & taxation --- Finance --- Climate policy --- Economic recession --- Economic growth --- World Economic Outlook --- International trade --- Trade balance --- Trade deficits --- Trade policy --- Public debt --- Domestic debt --- Government debt management --- Government debt planning --- Debt management policies --- Debt reorganization --- Carbon tax --- Non-renewable resources --- Emerging and frontier financial markets --- Greenhouse gas emissions --- Environmental impact charges --- Natural resources --- Financial services industry --- Greenhouse gases --- Climatic changes --- United States

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This paper explores the causes and consequences of fiscal dominance over monetary policy in Sub-Saharan Africa (SSA). Fiscal dominance has always been a pressing problem as it can contribute to inflation and macroeconomic instability, and increasingly so as fiscal deficits and public debt are rising in many SSA countries. We find that legal limits and availability of alternative financing options play an important role in determining the extent to which government deficits tend to be financed by the central bank. We also find economically significant effects of central bank lending to government on the exchange rate and inflation.

Money and Monetary Policy --- Public Finance --- Industries: Financial Services --- Price Level --- Inflation --- Deflation --- Monetary Policy --- Central Banks and Their Policies --- Fiscal Policy --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Foreign Exchange --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Taxation, Subsidies, and Revenue: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary economics --- Public finance & taxation --- Finance --- Bank credit --- Legal support in revenue administration --- Government debt management --- Government debt planning --- Loans --- Credit --- Revenue --- Debts, Public --- Congo, Democratic Republic of the --- Fiscal policy. --- Economic policy. --- Monetary policy.