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Mr. Rabah Arezki, Valerie A Ramey, and Liugang Sheng

oil price increases and shows that a differential response is important for understanding the differences in the effects of oil price increases on Norway versus Mexico. To determine the extent to which government is playing a role after giant oil discoveries, we investigate the responses of public vs. private investment and public vs. private consumption using data from the IMF (2013), as well as the response of the government spending-GDP ratio. As shown in Figure X , the private investment-GDP ratio increases, but the public investment-GDP ratio decreases. Thus

Mr. Francis Y Kumah and Mr. John J Matovu

, government spending/GDP ratio, and nominal GDP, respectively. 1 The variable v t is a matrix of economically meaningful structural shocks assumed to be serially uncorrelated with a diagonal contemporaneous covariance matrix, Ω, and u t is a matrix of innovations. The coefficients on the left-hand side capture the working of automatic stabilizers, whereas those on the right-hand side reflect responses to shocks—unexpected commodity price shocks ( v t p c o m ) , discretionary fiscal policy shocks ( v t Re v / y and v t E x p / y ) and output shocks v t y . The

Mrs. Lynn Aylward and Mr. Rupert Thorne

poorer countries, with the fewest options for raising resources or cutting expenses when faced with external imbalances, tend to incur arrears to the IMF. Such a relationship would be in contrast to the performance of numerous middle-income countries, for example, the Baker-15 countries, which during the debt crisis incurred arrears to non-IMF creditors, but never to the Fund. Indicators of macroeconomic policy stance that are examined are the fiscal position and the price environment. We test both the central government spending-GDP ratio (EXPGDP) and the central

Mr. Benedict J. Clements, Mr. Jerald A Schiff, Peter Debaere, and Mr. Hamid R Davoodi

military spending to GDP 0.05 (1.16) 0.07 (1.40) IMF program dummy 0.54 1/ (0.23) (−0.01) (−0.85) 0.02 (0.82) −0.02 (−1.60) Ratio of military spending to GDP 0.61*** (5.13) 0.39*** (3.82) Ratio of government spending to GDP −0.4 (−0.82) −0.34 (−0.60) IMF program dummy x government spending-GDP ratio 1.79*** (3.72) 1.88*** (3.39) Number of observations 1740 1740 1740 1740 P-value 0.03 0.03 0.00 0.00 Note: Generalized Method of Moments (GMM) is the estimation technique

Mr. Hamid R Davoodi, Mr. Benedict J. Clements, Mr. Jerald A Schiff, and Peter Debaere

.60) IMF program dummy × government spending-GDP ratio 1 79 *** 1.88 *** (3.72) (3.39) Number of observations 1740 1740 1740 1740 P -value 0.03 0.03 0.00 0.00 Note: Generalized Method of Moments (GMM) is the estimation technique, using demeaned data. Numbers in parentheses denote t -statistics, based on heteroskedastic, serial-correlation consistent standard errors. All variables are in logs except for dummy variables and the ratio of the current account to GDP, which takes on positive and negative values

Ms. Gabriela Inchauste, Mr. Bernardin Akitoby, Mr. Benedict J. Clements, and Mr. Sanjeev Gupta
We examine the short- and long-term movements of government spending relative to output in 51 countries. We find that in the short term, the main components of government spending increase with output in about half of the sample countries, with some variation across spending categories and countries. Further, we find that there is a long-term relationship between government spending and output (in line with "Wagner's law") for the majority of countries for at least one spending aggregate. In the short term, we find that power dispersion and government size typically dampen the positive response of government spending to output. Output volatility and financial risk, on the other hand, contribute to the procylicality of government spending.
Mr. Bernardin Akitoby, Mr. Benedict J. Clements, Mr. Sanjeev Gupta, and Ms. Gabriela Inchauste

as the government spending/GDP ratio returns to its long-term average. In these countries, special care will need to be taken to ensure that spending cuts achieved over the short run are accompanied by longer-term structural reforms to ensure these savings are durable. For future work, the following issues should be addressed. First, it would be useful to deepen the empirical analysis by distinguishing between good times and bad. Another issue that warrants further research is how IMF-supported economic reforms, with their emphasis on fiscal reforms, have

Mr. Francis Y Kumah and Mr. John J Matovu
Unanticipated changes in commodity prices can generate significant movements in fiscal aggregates. This paper seeks to understand the dynamics of these fiscal movements in the context of transitory commodity price shocks using sample data from four CIS countries- two oil-producing and two non-oil commodity-intensive countries. It adopts a structural VAR approach and identifies the dynamic effects of commodity price shocks on fiscal performance under two broad tax regimes. Stochastic simulations indicate high probabilities of fiscal overperformance in the short term when commodity prices are high. These probabilities deteriorate significantly, however, in the long term after the transitory positive commodity price shock has dissipated, particularly when lax fiscal policy is adopted during the period of the price boom.
Mr. Francis Y Kumah and Mr. John J Matovu

G ( L ) is an NxN matrix lag polynomial of finite order, L is the lag operator such that a ( L ) x t = [ a 0 L 0 + a 1 L 1 + a 2 L 3 + … + a p L p ] x t , L ω x t −ω , Xt = [ln Pcom t ,ln(Re v t / y t ), ln( Exp t / y t ), ln y t ]’ is a vector of the logarithm of the commodity price index, revenues/GDP ratio, government spending/GDP ratio and nominal GDP, and v t is a matrix of economically meaningful structural shocks assumed to be serially uncorrelated with a diagonal contemporaneous covariance matrix, Ω. Then, if G 0 is invertible, the data

Mr. Benedict J. Clements, Mr. Jerald A Schiff, Peter Debaere, and Mr. Hamid R Davoodi
The end of the Cold War has ushered in significant changes in worldwide military spending. This paper finds that the easing of (1) international tensions, (2) regional tensions, and (3) the existence of IMF-supported programs are related to lower military spending and a higher share of nonmilitary spending in total government outlays. These factors account for up to 66 percent, 26 percent, and 11 percent of the decline in military spending, respectively. Furthermore, fiscal adjustment has implied a larger cut in military spending of countries with IMF-supported programs.