Table 1. Summary statistics: Fiscal cyclicality, business cycles and accountability

Table 1. Summary statistics: Fiscal cyclicality, business cycles and accountability

Global Sample Number of Observations Mean Standard deviation Median Minimum Maximum

HP-filtered cyclical component of log of real expenditures HP-filtered cyclical component of log real GDP V-DEM accountability index normalized 0 to 1 V-DEM vertical accountability index normalized 0 to 1 V-DEM diagonal accountability index normalized 0 to 1 V-DEM horizontal accountability index normalized 0 to 1 3933 -0.000001 0.071 -0.002 -0.930 0.510

3933 -0.0002 0.030 -0.0004 -0.624 0.275 3508 0.712 0.248 0.800 0.029 0.980

3508 0.725 0.217 0.785 0.055 0.964

3508 0.725 0.248 0.819 0.034 0.982

3508 0.641 0.282 0.732 0.028 0.991

Middle East and North Africa HP-filtered cyclical component of log of real expenditures HP-filtered cyclical component of log real GDP V-DEM accountability index normalized 0 to 1 V-DEM vertical accountability index normalized 0 to 1 V-DEM diagonal accountability index normalized 0 to 1 V-DEM horizontal accountability index normalized 0 to 1 361 -0.0003 0.097 -0.001 -0.715 0.436

361 -0.0004 0.050 -0.0001 -0.624 0.241 361 0.442 0.226 0.444 0.093 0.927

361 0.491 0.243 0.571 0.055 0.895

361 0.440 0.230 0.485 0.068 0.915

361 0.452 0.251 0.401 0.097 0.976

Source: World Development Indicators from the World Bank and the Varieties of Democracy Dataset from the V-DEM Institute. Note: The global sample also includes Middle East and North Africa countries. The sample covers 2000 to 2020 observations only. The global sample contains 194 countries, whereas the Middle East and North Africa sample contains 19.

This chapter focuses on the accountability of the executive branch. It uses an accountability measure from the V-DEM Institute’s Varieties of Democracy Dataset, which captures constraints on a government’s executive branch. It has three sub-components of accountability: vertical accountability, diagonal accountability, and horizontal accountability. They reflect the extent to which governments are accountable to citizens (vertical accountability), to other state institutions (horizontal accountability), and to the media and civil society (diagonal accountability).

When comparing the Middle East and North Africa region with the global average, the region is behind in terms of accountability (see Table 1). Economic business cycles are also more volatile in the region than in the rest of the world, as illustrated by higher standard deviations in the cyclical components of the log of per capita GDP.

Following Calderon and Nguyen (2016), the empirical framework is as follows:

ġc,t = β0 + β1ẏc,t + β2ẏc,t * LogAccc,t-1 + β3ẏc,t * Logypcc,t-1 + yearFE + ϵc,t (1)

where c is for country, t is for year, ġc,t is the (HP-filtered) cyclical component of log of real government expenditures, ẏc,t is the (HP-filtered) cyclical component of log of real GDP, LogAccc,t-1 is log of accountability of country c at year t-1, Logypcc,t-1 is log of per capita income of country c at year t-1. 7 Year fixed effects are included to control for common responses to global shocks. Country fixed effects are not included because this chapter aims to exploit the variation of

7 Other control variables were considered, such as being resource rich. The results remain robust.