Abstract: This study utilizes the International Monetary Fund (IMF) Fiscal Rules Dataset focusing on four specific fiscal rules such as expenditure rule, revenue rule, budget balance rule, and debt rule and five main characteristics of each fiscal rule those are monitoring, enforcement, coverage, legal basis, and escape clause to construct the Fiscal Rule Index for nine countries in the Asia-Pacific region from 1996 to 2015. After constructing the fiscal rule index for each country, we utilize the Panel Generalized Method of Moments (Panel GMM) by using the constructed fiscal rule index to examine the effectiveness of fiscal rules in reducing procyclicality. Empirical results show that national fiscal rules have a significantly negative impact on procyclicality of government expenditure. Additionally, stricter fiscal rules combined with high government effectiveness are effective in reducing procyclicality of government expenditure. Results of this study indicate that for nine Asia-Pacific countries, policymakers’ use of fiscal rules and government effectiveness to reducing procyclicality of fiscal policy are effective.
Abstract: The wisest economic decision of United States in the
20th century was establishing the favorable international monetary
system, and capturing the leadership position in it. This decision gave
economic hegemony to the US for the next more than 7 decades. The
continuation of this hegemony till the next decade seems difficult as
the US economy is under continuous streams of recessions since
2007. On the other hand, Chinese economy is progressing with a
very fast speed and is estimated to pass the US economy till 2025, in
various aspects. Will the US be able to continue its leadership in the
IMS? Will China replace US in the international monetary system?
The answers to these questions have been explored by comparing the
economic competitiveness of US and China, with respect to each
other. The paper concludes that the change in global economic
environment will compel US to share the leadership of international
monetary system with China. This sharing will solve most problems
of the current IMS, but will also birth some new problems.