We examine the role of variables derived from the political economy literature such as the degree of social fragmentation (Ilzetzki, 2011) or the absence of a level playing field, such as the power distribution among social groups, the distribution of resources within societies, and the level of ethnicreligious tensions (Table 4, columns 1 to 3). All these variables are considered as a proxy to the social polarization, to capture the impact of the “voracity effect” on the budget. Indeed, social polarization is mostly captured by ethnic/linguistic/religious polarization indicators. We find that more equal distribution of resources and more ethnic-religious stability are associated with less procyclicality.

One of the more critical determinants of procyclicality is whether the country is resource-dependent or resource-rich (Table 4, columns 4, 5 and 6).<sup>9</sup> In all cases, we find a strong procyclical bias in resourcesdependent and resources-rich countries, suggesting a procyclical resource curse, in line with the recent literature (Arezki and Bruckner, 2012; Konuki and Villafuerte, 2016). One of the more interesting results is that procyclicality is arising from resource-dependence increases over time.

We also found a more significant procyclicality bias during election years (Column 7 of Table 4), though the effect appears decreasing over time. This effect is more pronounced in AFR than in LAC or MENA. We find no impact of the debt level on the procyclicality l bias, contrary to findings by Frankel et al. (2013) but like Konuki and Villafuerte (2016) for Africa.

To examine the correlation of procyclicality and fiscal institutions, we include a measure of the rigidity of the budget and variables that describe fiscal rules. The rigidity of spending variable dampens the procyclical bias. The rigid component of public expenditure reduces the procyclical bias (Table 4, column 9). But the effect is asymmetric over the business cycle: the mitigation of procyclicality through spending rigidity is larger during the upturns of the cycle (column 2 of Table 5). Finally, we found no evidence that fiscal space affects the procyclicality of public spending (Table 4, column 10). However, exploring potential heterogeneity over the period, we find that the fiscal space variable affects procyclicality, with lower fiscal space inducing higher procyclicality, but only when the sample is broken to include the most recent years 2009-2016.<sup>10</sup> Finally, we find evidence of heterogeneous procyclical behavior along the cycle: at first, we find no direct evidence of the asymmetry (Table 5, Column 1), but when the rigidity and fiscal space variables

> 9 Resources-dependent countries are countries for which commodity revenues (GGRC in WEO data set) account for at least 10 percent of total revenues minus grants (GGR and GGRG series in WEO data set) at least 50 percent of the time over the considered period. This definition is derived from Konuki and Villafuerte (2016) and enables us to capture countries with a resource-dependent revenue structure. For more details, see Table E.1. Resources-rich countries are defined by the IMF (2012), here is a direct access to the report (https://www.imf.org/external/np/pp/eng/2012/082412.pdf). According to this definition, we capture countries where production on natural resources reached more than 20% of exports. For more details, see Table A.2.

> 10 The findings are not presented in the paper but available upon request.

12