Sanjeev Gupta

Center for Global Development

This paper examines the impact of government spending on inclusive growth in developing Asia, focusing on fiscal redistribution through education, health, and social benefits. Using panel data from 16 countries over the period 1970–2017, we apply a fixed-effects logistic regression model to assess the likelihood of inclusive growth episodes. Our fi...

Using discrete choice models, this paper examines the macroeconomic and political factors motivating more than 450 fiscal consolidation episodes in 185 countries during the period 1979–2019. In emerging and developing countries, consolidations are more likely during “good times”: when growth is high, and countries experience positive terms of trade...

This paper discusses the evolution of key taxes during the past 20 years in developing Asia and the fiscal challenges that the region’s economies face in light of the coronavirus disease (COVID-19) pandemic. It presents estimates of tax capacity and tax potential, and discusses the productivity of key taxes in the region. The paper finds that devel...

The new year has hardly begun, but fears of a looming recession persist. Pandemic-era increases in health spending are unlikely to continue in low- and middle-income countries. Growing fiscal pressures­—such as high debt, increasing interest rates, and declining foreign aid and revenues—bode ominously for government spending, including government s...

We construct a novel database covering more than 450 fiscal consolidation episodes in 185 countries during the period 1979-2019. Using discrete choice models, we then examine the (broader macroeconomic and political) factors motivating these fiscal consolidation episodes. In emerging and developing countries, consolidations are more likely during "...

In this paper, we estimate short- and long-term tax buoyancy for 44 sub-Saharan African (SSA) countries during 1980–2017 using time series and panel techniques. We find that the long-term tax buoyancy is either one or slightly above one for most SSA countries. Fragile states have a lower short-term tax buoyancy reflecting their institutional weakne...

We empirically assess the impact of tax reforms on income distribution in developing countries. We apply the local projection method to a new “narrative” database of tax reforms covering 45 emerging and low-income countries. Reforms of the personal income or strengthening of the revenue administration lower the disposable Gini and increase the bott...

We estimate that the short- to medium-term fiscal impact of previous pandemics has been significant in 170 countries (including low-income countries) during the 2000–2018 period. The impact has varied, with pandemics affecting government expenditures more than revenues in advanced economies, while the converse applies to developing countries. Using...

Economist Peter Heller, writing a seminal paper published in Health, Policy and Planning in 2006, identified five opportunities for expanding fiscal space for health: raising revenue, reprioritizing expenditure, borrowing, using seigniorage and mobilizing external grants. The development of the initial framework marked a significant conceptual adva...

Efficiency has historically been considered a key mechanism to increase the amount of available revenues to the health sector, enabling countries to expand services and benefits to progress towards universal health coverage (UHC). Country experience indicates, however, that efficiency gains do not automatically translate into greater budget for hea...

Building or restoring fiscal institutions is central to state-building and economic growth in fragile states. This chapter proposes a two-step approach to designing and implementing tax revenue and public expenditure reforms in fragile states based on the experience of IMF technical assistance programs. Reforms to build fiscal institutions in fragi...

Military spending in relation to national GDP and government budgets in both advanced and developing economies has fallen considerably since the end of Cold War. The previous papers have studied convergence in military spending by deploying methodologies used to analyze convergence in country growth rates and other economic variables. In this paper...

We study the long-run relationship between expenditure conditionality in IMF programmes and the composition of public spending. We compile a granular dataset on government expenditure conditions in 115 countries during 1992–2016 and find that it is structural conditionality which delivers lasting benefits. Structural public financial management con...

This paper studies the evolution of worldwide military spending during 1970-2018. It finds that military spending in relation to GDP is converging, but into three separate groups of countries. In the largest group, responsible for 90 percent of worldwide spending, outlays have remained stubbornly high. Military spending in developing economies reac...

This paper assesses the effects of fiscal consolidations associated with public debt reduction on medium-term output growth during periods of private debt deleveraging. The analysis covers 107 countries and 79 episodes of public debt reduction driven by discretionary fiscal adjustments during the 1980–2012 period. It shows that expenditure-based, f...

Declining fertility and increasing longevity will lead to a slower-growing, older world population. The share of the world population older than age 65 could increase from 12% today to 38% by 2100. In most countries, population is projected to peak sometime this century and decline thereafter. These developments would place public finances of count...

This article analyzes the causes and consequences of fiscal consolidation promise gaps, defined as the distance between planned fiscal adjustments and actual consolidations. Using 74 consolidation episodes derived from the narrative approach in 17 advanced economies during 1978–2015, the paper shows that promise gaps were sizeable (about 0.3% of gr...

This article revisits the effects of corruption on the state's capacity to raise revenue, building on the existing empirical literature using new and more disaggregated data. We use a comprehensive dataset for 147 countries spanning 1995-2014, compiled by the International Monetary Fund. The study finds that-consistent with the existing literature-...

This article examines if the observed favourable impact of conditionality in IMF programmes on revenue performance arises from changes in tax rates. It does so by studying the experience of 126 low- and middle-income countries during 1993–2013. When changes in tax rates are controlled for, the impact of revenue conditionality (and especially condit...

This paper assesses whether conditionality in IMF-supported programmes has helped offset the potential negative effect of foreign aid on tax revenues. The analysis – carried out on panel data covering 1993-2012 for 111 low- and middle-income countries – shows that growing use of revenue conditionality by low-income countries partially offsets the d...

This paper explores the impact of elections on public investment. Working with a sample of 67 presidential and parliamentary democracies between 1975 and 2012, we find that the growth rate of nominal public investment is higher at the beginning of electoral cycles and decelerates thereafter. The peak in public investment growth occurs 28 months bef...

This paper studies whether revenue conditionality in Fund programs had any impact on the revenue performance of 126 low- and middle-income countries during 1993–2013. The results indicate that such conditionality had a positive impact on tax revenue, with strongest improvement felt on taxes on goods and services, including the VAT. Revenue conditio...

This paper assesses whether conditionality in IMF-supported programs has helped offset the potential negative effect of foreign aid on tax revenues. The analysis—carried out on panel data covering 1993–2012 for 111 low- and middle-income countries—shows that growing use of revenue conditionality by low-income countries partially offsets the d...

In this paper, we study the impact of fragmented politics on public debt—in particular, between two consecutive legislative elections. Using data for 92 advanced and developing countries during 1975-2015, we find a positive association between political fragmentation and public debt changes. Corruption magnifies the effects; with higher perceived...

Prompted by the 20th anniversary of the 1993 World Development Report, a Lancet Commission revisited the case for investment in health and developed a new investment framework to achieve dramatic health gains by 2035. The Commission's report has four key messages, each accompanied by opportunities for action by national governments of low-income an...

The sizeable increase in income inequality experienced in advanced economies and many parts of the world since the 1990s and the severe consequences of the global economic and financial crisis have brought distributional issues to the top of the policy agenda. The challenge for many governments is to address concerns over rising inequality while si...

Prompted by the 20th anniversary of the 1993 World Development Report, a Lancet Commission revisited the case for investment in health and developed a new investment framework to achieve dramatic health gains by 2035. The Commission's report has four key messages, each accompanied by opportunities for action by national governments of low-income an...

This Staff Discussion Note looks at the stark fiscal challenges posed by the decline and aging of populations between now and 2100. It finds that without reforms, pensions and health spending would rise to 25 percent of GDP by end-century in more developed countries (and 16 percent of GDP in less developed countries), with potentially dire fiscal c...

Angola is the second largest oil producer in sub-Saharan Africa and one of the continent's richest countries. Yet more children under the age of five die there than in most places in the world. Most resource-rich countries lack the types of institutions needed to manage natural resource wealth effectively, and past performance does not bode well fo...

This paper addresses whether the recent slowdown in public health spending in advanced economies is temporary or permanent. It finds that the slowdown in most countries is temporary, underscoring the need for long-lasting structural reforms to preserve and extend the impressive gains in health achieved in the past and reduce the growth of this spen...

This paper uses a newly constructed revenue dataset of 35 resource-rich countries for the period 1992-2009 to analyze the impact of expanding resource revenues on different types of domestic (non resource) tax revenues. Overall, we find a statistically significant negative relationship between resource revenues and total domestic (non resource) rev...

Some scholars have argued that direct distribution of natural resource revenues to the population would help resource-rich countries escape the “resource curse.” This Staff Discussion Note analyzes whether this proposal is a viable policy alternative for resource-rich countries.

Energy subsidies are pervasive. Pretax subsidies, which arise when energy consumers pay less than the supply cost of energy, are high in many developing and emerging economies. Although pretax subsidies are not prevalent in advanced economies, they have large tax subsidies. These arise when energy is taxed below the rate of other consumption goods...

This paper studies whether revenue conditionality in Fund programs had any impact on the revenue performance of 126 low- and middle-income countries during 1993–2013. The results indicate that such conditionality had a positive impact on tax revenue, with strongest improvement felt on taxes on goods and services, including the VAT. Revenue conditio...

Executive summary Prompted by the 20th anniversary of the 1993 World Development Report, a Lancet Commission revisited the case for investment in health and developed a new investment frame work to achieve dramatic health gains by 2035. Our report has four key messages, each accompanied by opportunities for action by national governments of low-inc...

This paper assesses the effects of fiscal consolidations associated with public debt reduction on medium-term output growth during periods of private debt deleveraging. The analysis covers 107 countries and 79 episodes of public debt reduction driven by discretionary fiscal adjustments during 1980–2012. It shows that expenditure-based, front-loaded...

This article finds that education and health spending has risen during International Monetary Fund (IMF)-supported programmes at a faster pace than in developing countries as a whole. The analysis is based on the most comprehensive dataset assembled thus far for this purpose, with data covering 1985 to 2009 for 140 countries. Controlling for other...

B EING well endowed with resources may be beneficial for a developing country, but an abundance of re-sources can make it difficult for pol-icymakers to design and implement spending and tax policies. Authorities in these resource-rich econo-mies must contend with several issues: • Nonrenewable resources—including oil, gas, and minerals—are exhaust...

This paper studies the cyclical behavior of public spending on health and education in 145 countries during 1987–2007. It finds that spending on education and health is procyclical in developing countries and acyclical in developed countries. In addition, education and health expenditures follow an asymmetric pattern in developing countries; they a...

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series repl...

This paper assesses the determinants of the duration of debt reduction episodes in a large sample of countries over the last three decades using a survival model. Results show that increases in the primary balances are the main source of debt reduction. Expenditure-based fiscal adjustments are key for reducing the length of debt consolidation spell...

Discusses issues of health care reform in advanced and emerging economies

This paper reexamines the relationship between aid and domestic tax revenues using a more recent and comprehensive dataset covering 118 countries for the period 1980 - 2009. Overall, our results support earlier findings of a negative association between net Official Development Assistance (ODA) and domestic tax revenues, but this relationship appea...

This note will describe recent trends in income inequality in both advanced and developing economies and how tax and expenditure policies have impacted on these trends. It will discuss how tax and expenditure policies should be designed to bring about a more equitable distribution of income, as well as to protect the most vulnerable populations dur...