Institutional Approach to the Budget Deficit
An Empirical Analysis
Bibliographic Data
| ID | 16912032 |
|---|---|
| Authors | Asma Arif (0000-0001-7003-6066, University of Wah, corresponding author), Umaima Arif (Quaid-i-Azam University) |
| Year | 2023 |
| Volume | 13 |
| Issue | 2 |
| Publication date | 2023-04-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | SAGE Open (JOURNAL) |
| Journal identifiers | ISSN: 2158-2440 • E-ISSN: 2158-2440 |
| Publisher | SAGE Publications (PUBLISHER • US) |
| DOI | 10.1177/21582440231171297 |
| OpenAlex | W4368375627 |
| Language | EN |
| Citations received | 1 |
| References cited | 42 |
The objective of this study is to examine the factors affecting the budget deficit by using a panel dataset of 66 countries from 1996 to 2020. In the first stage regressions, the current study employs fixed and random effect models to estimate the impact of institutional quality and other economic variables on the budget deficit. In the second stage regression, pooled mean group (PMG) and mean group (MG) estimation method is employed for estimating the long-run and short-run coefficients for the effect of institutional quality and other economic variables on the budget deficit in a heterogeneous panel dataset. The empirical estimates confirm that GDP per capita is positively and significantly associated with the budget deficit in the long run. Further, inflation rates and trade openness also have positive and significant impacts on the budget deficit in the long run. Moreover, the results show that, in the long run, the population growth rate is negatively associated with budget deficit. As far as institutional variables are concerned, the empirical findings show that an increase in corruption in government institutions leads to a significant increase in the budget deficit. However, political stability, improved bureaucratic quality, democratic accountability and the rule of law lead to a reduction in the budget deficit. The current study will help policymakers and practitioners to better understand the determinants of the budget deficit and to design the policies for the improvement of institutional quality which, in turn, may control the level of a budget deficit. Jel Codes: H5, H6, H3, H4
Accountability · Deficit spending · Econometrics · Economics · Empirical research · Federal budget · Fixed effects model · Government budget · Language change · Macroeconomics · Panel data · Per capita · Population · Public economics · Public finance · Statistics · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Housing Market and Economics · Medicine · Finance
Estimating long-run relationships from dynamic heterogeneous panels
The Case for Restricting Fiscal Policy Discretion
The Political Economy of Budget Deficits
Political Institutions and Policy Volatility
Government Spending and Budget Deficits in the Industrial Countries
Covid‐19 and Inequalities
Pooled Mean Group Estimation of Dynamic Heterogeneous Panels
Testing slope homogeneity in large panels
A simple panel unit root test in the presence of cross‐section dependence
Institutions, Institutional Change and Economic Performance
Income distribution, political instability, and investment
Fiscal disequilibrium in developing countries
Exploring Government Budget Deficit and Economic Growth
The Monetary Approach to the Balance of Payments
Distributive Politics and Economic Growth
| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |