|Dependent vari|able: Cyclica|lity of fscal|policy<br>ˆ<br>_βit_||||||||
|---|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|
|FRD|0.294|0.326|0.385|0.386|0.555|0.555|0.750|0.733|2.010|2.092|
||(0.288)|(0.017)|(0.025)|(0.057)|(0.388)|(0.394)|(0.418)|(0.423)|(1.570)|(0.940)|
|BQ|-0.602***|-0.589***|-0.578**|-0.621*|-0.579**|-0.578**|-0.503|-0.521 *|-0.079 *|-1.002*|
||(0.310)|(0.034)|(0.065)|(0.208)|(0.075)|(0.075)|(0.117)|(0.090)|(0.094)|(0.090)|
|ERR|0.040***|0.043***|0.047**|0.069*|0.075**|0.075**|0.103**|0.101 *|0.118 *|0.252 *|
||(0.039)|(0.002)|(0.006)|(0.022)|(0.008)|(0.008)|(0.008)|(0.009)|(0.009)|(0.010)|
|FRD X BQ|||||||||-0.549 **<br>(0.038)||
|FRD X ERR||||||||||-0.241***<br>(0.007)|
|IT||-0.269|-0.398***|-0.474***|-0.336***|-0.336***|-0.369***|-0.379***|-0.475***|-0.532 ***|
|||(0.019)|(0.032)|(0.106)|(0.046)|(0.046)|(0.025)|(0.026)|(0.026)|(0.026)|
|ELECTIONS|||0.033***|0.030|0.026***|0.026***|0.026***|0.027 ***|0.023 ***|0.031 ***|
||||(0.002)|(0.004)|(0.003)|(0.002)|(0.003)|(0.002)|(0.002)|(0.002)|
|POLARIZ||||-0.409***|-0.437***|-0.436***|-0.350***|-0.333***|-0.299***|-0.351***|
|||||(0.018)|(0.011)|(0.011)|(0.009)|(0.007)|(0.007)|(0.007)|
|GDPPC|||||-0.892***|-0.890***|-0.808***|-0.729 ***|-0.790 ***|-0.847***|
||||||(0.057)|(0.057)|(0.055)|(0.058)|(0.058)|(0.059)|
|OV||||||1.585**|1.833*|13.458 **|10.062 **|-2.864 **|
|||||||(3.700)|(5.331)|(4.481)|(4.481)|(4.569)|
|DEBT|||||||-0.001|-0.002|-0.001|-0.002|
||||||||(0.001)|(0.000)|(0.000)|(0.000)|
|RENT||||||||-0.012 ***|-0.008 ***|-0.015***|
|||||||||(0.002)|(0.002)|(0.002)|
|Obs.|2,177|2,177|1,242|978|962|970|901|883|883|883|
|Countries|120|120|72|71|70|70|61|68|68|68|
|Hansen J|0.275|0.300|0.240|0.132|0.163|0.163|0.139|0.167|0.153|0.265|

Bootstrapped standard errors in parenthesis (100 replications) * p _<_ 0.10, ** p _<_ 0.05, *** p _<_ 0.01 Table 3: Estimation results: addressing endogeneity

# **7 Robustness Check**

In this section, we provide a robustness check for our empirical findings. In order to check the consistency of our empirical results, we use an alternative variable of institutional quality from a source other than ICRG. We employ the _government effectiveness_ index from the Worldwide Governance Indicators, 2015 Update database of the World Bank.<sup>5</sup> The Government effectiveness reflects “perceptions of the quality of public service, the quality of civil service and the degree of independence of political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to these services.” It was initially comprised between -2.5 and 2.5 with high values indicating more efficient governments. However, we normalize it between 0 and 5.

Table 4 displays the estimation results when we perform the same regressions as in the previous

> 5The whole data set comprises data on the quality of governance provided by “a large number of enterprise, citizen and expert survey respondents in industrial and developing countries. These data are gathered from a number of survey institutes, think tanks, non-governmental organizations, international organisations, and private sector firms.”

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