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Publications & Research :: Policy Research Working Paper

Creating and Using Fiscal Space for Accelerated Development in Liberia

ACCOUNTING ADMINISTRATIVE COSTS AGRICULTURAL SECTORS AGRICULTURE BALANCE OF PAYMENTS BANK POLICY BUDGET BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGETS CAPITAL CAPITAL ACCOUNT CAPITAL ACCUMULATION CAPITAL STOCK CAPITAL STOCKS COMMODITIES COMMODITY CONSUMPTION CREDIT CREDIT FACILITY CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT DATA AVAILABILITY DEBT DEBT CAPITAL DEBT INTEREST DEBT STOCKS DEMAND CURVES DEVELOPING COUNTRY DEVELOPMENT DEVELOPMENT ECONOMICS DEVELOPMENT POLICIES DEVELOPMENT POLICY DEVELOPMENT STRATEGY DISPOSABLE INCOME DOMESTIC BORROWING DOMESTIC DEBT DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC PRICE DOMESTIC PRICES ECONOMIC ACTIVITIES ECONOMIC GROWTH ECONOMIC POLICY ECONOMY EDUCATION SPENDING EDUCATIONAL ATTAINMENT EDUCATIONAL ATTAINMENTS ELASTICITY EXCHANGE EXPORTS FACTOR DEMAND FACTORS OF PRODUCTION FINANCE FINANCES FISCAL POLICIES FISCAL YEAR FIXED INVESTMENT FOREIGN DEBT FOREIGN DEBTS FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN GOVERNMENT FOREIGN INTEREST FOREIGN TRANSACTIONS FULL EMPLOYMENT FUTURE GDP GINI COEFFICIENT GOOD GOVERNMENT BORROWING GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT INVESTMENT GOVERNMENT INVESTMENTS GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING GOVERNMENTS GRANT GRANTS GROSS NATIONAL SAVINGS GROSS REVENUES GROWTH RATE GROWTH RATES HOUSEHOLD HOUSEHOLDS HUMAN DEVELOPMENT IMPORT TARIFFS INCENTIVES INCOME INCOMES INDUSTRY INEQUALITY INFLUENCE INFORMATION SERVICES INFRASTRUCTURE INITIAL INVESTMENT INPUTS INTEREST INTEREST PAYMENTS INTERNAL RATES OF RETURN INTERNATIONAL BANK INTERNATIONAL MARKETS INVESTMENT INVESTMENT CLIMATE INVESTMENT FINANCING INVESTMENT FLOWS INVESTMENT SPENDING LABOR LABOR MARKET LAGS LAND LENDING LOANS MARGINAL PRODUCTIVITY MARGINAL VALUE MARKET MARKET PRICES MARKETS MIDDLE-INCOME COUNTRIES NATIONAL ECONOMY NATURAL RESOURCES NEGATIVE EXTERNALITIES OPERATING SURPLUS OPPORTUNITY COST OPTION OPTIONS OUTCOMES OUTPUT OUTPUTS PAYMENT PAYMENT FLOWS PAYMENTS POLITICAL ECONOMY POSITIVE EFFECTS POVERTY PRESENT VALUE PRICE PRICE CHANGE PRICE CHANGES PRICE LEVELS PRICES PRIVATE CAPITAL PRIVATE INVESTMENT PRIVATE SAVINGS PRODUCTION PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY INCREASES PROFIT PROFIT MAXIMIZATION PROFITS RAPID GROWTH REAL EXCHANGE RATE REAL GDP REAL INTEREST REAL INTEREST RATES REAL SECTOR RECEIPT RECEIPTS REMITTANCES RENT RETURNS SAVINGS SAVINGS RATE SERVICES SHARE SHARE OF INVESTMENTS SHARES SMALL COUNTRY STRATEGIES STRUCTURAL CHANGE SUPPLY CURVE SUPPLY CURVES SUSTAINABILITY ANALYSIS TARIFFS TAX TAX RATE TAX RATES TAXATION TAXES TELECOMMUNICATIONS THEORY TOTAL FACTOR PRODUCTIVITY TRADE TRADE DEFICIT TRANSACTIONS TRANSACTIONS COSTS TRANSFERS TRENDS TRUST FUND UNEMPLOYMENT UNEMPLOYMENT RATE UTILITY VALUE VARIABLES WAGES WATER SUPPLY WORLD DEVELOPMENT INDICATORS WORLD MARKETS
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World Bank, Washington, DC
Africa | Liberia
2014-02-04T20:37:53Z | 2014-02-04T20:37:53Z | 2013-10

This paper presents simulations for the period 2013-2030 of measures that permit increased spending on infrastructure and human development, the priority areas in Liberia's 2013-2017 "Agenda for Transformation" and for its national vision, Liberia Rising 2030. The simulations are carried out with a Liberian version of MAMS (Maquette for Millennium Development Goals Simulations), a Computable General Equilibrium model. According to the results, among the key sources of fiscal space, foreign grants generate the best outcomes followed by improved government allocative efficiency. Taxes tend to involve trade-offs since they reduce resources for private consumption and investment, both of which tend to contribute to stronger macro and Millennium Development Goals performance. Increased foreign borrowing is less attractive since, in order to make a substantial difference, it would quickly add to the foreign debt, making the economy more crisis-prone and less flexible. The preferred balance between different uses of fiscal space depends on payoffs from different government functions, typically unknown or only appearing with a lag. Under the parameters used in the simulations, determined in light of fragmentary evidence, the outcomes were marginally stronger under a balanced approach with scaling up of both infrastructure and human development services. Balanced expansion may also contribute to efficiency and be easier for political reasons. A final finding is that it is possible to consider fiscal space issues in isolation from the mining sector: simulations suggest that the marginal effects of creating additional fiscal space are very similar irrespective of the level of mining export prices.

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