Institutional quality and fiscal policy: an empirical investigation in Asia Pacific countries

Abstract

Research on fiscal policy has recently re-emerged after the subprime crisis in 2007. This paper contributes to the literature by examining the impact of institutional quality on the conduct of fiscal policy across Asia Pacific countries from 2002 to 2013. This study is among the first attempts unveiling the important roles of institutional quality on fiscal policy conducting. The study finds that better institutional quality tends to slow down the growth rates of tax revenue and government expenditure. This has strong implications to not only policymakers but also international financial organizations such as International Monetary Fund and World Bank on their funding agreements