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Governance quality vs. stimulus size: fiscal policy effectiveness during the COVID-19 pandemic
Mert Topcu* 
Mert Topcu
Affiliation: Alanya Alaaddin Keykubat University, Faculty of Economics, Administrative and Social Sciences, Department of Economics, Antalya, Türkiye
 0000-0001-8236-9810
Correspondence
mert.topcu@alanya.edu.tr
Mustafa Alpin Gulsen *
Mustafa Alpin Gulsen
Affiliation: Alanya Alaaddin Keykubat University, Faculty of Economics, Administrative and Social Sciences, Department of Economics, Antalya, Türkiye
0000-0002-2860-4469
Article | Year: 2025 | Pages: 251 - 272 | Volume: 49 | Issue: 2 Received: December 25, 2024 | Accepted: March 23, 2025 | Published online: June 7, 2025
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Principle component
|
Proportion of variance
|
Cumulative proportion
|
|
PC1
|
85.1
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85.1
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PC2
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6.7
|
91.9
|
|
PC3
|
4.5
|
96.5
|
|
PC4
|
2.0
|
98.6
|
|
PC5
|
0.8
|
99.4
|
|
PC6
|
0.5
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100.0
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Source: Authors’ calculation.
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Variables
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Obs.
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Mean
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Std. dev.
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Min.
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Max.
|
|
Growth
|
144
|
-0.010
|
0.053
|
-0.179
|
0.165
|
|
Capital
|
144
|
7.116
|
1.541
|
2.978
|
10.561
|
|
Education
|
143
|
2.079
|
0.457
|
0.470
|
2.653
|
|
Lockdown policy
|
144
|
3.988
|
0.451
|
1.868
|
4.497
|
|
Fiscal stimulus
|
144
|
2.293
|
1.211
|
-1.647
|
8.202
|
|
Governance quality
|
144
|
-0.150
|
1.379
|
-2.304
|
2.222
|
|
|
Growth
|
Capital
|
Education
|
Lockdown policy
|
Fiscal stimulus
|
|
Growth
|
1.000
|
|
|
|
|
|
Capital
|
0.187
|
1.000
|
|
|
|
|
Education
|
0.191
|
0.690
|
1.000
|
|
|
|
Lockdown policy
|
-0.163
|
0.416
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0.435
|
1.000
|
|
|
Fiscal stimulus
|
0.048
|
0.436
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0.376
|
0.227
|
1.000
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Panel A: Full Sample
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Panel B: Robustness Check
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Regimes
|
Coefficients
|
Coefficients
|
|
Regime 1
|
-0.045***
(0.009)
|
-0.027**
(0.014)
|
-0.040***
(0.012)
|
-0.041***
(0.015)
|
|
Regime 2
|
0.017
(0.015)
|
0.001
(0.013)
|
0.038
(0.018)
|
0.002
(0.016)
|
|
Regime 3
|
-
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0.039**
(0.019)
|
-
|
0.039**
(0.019)
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Threshold variable
|
fiscal stimulus
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δ
|
fiscal stimulus
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δ
|
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Threshold order
|
1: 1.395
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1: -0.736
2: 0.145
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1: 1.798
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1: -0.761
2: 0.145
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Note: Regressions include a regime varying constant. The results of regime-varying control variables are not reported. δ is an interaction of governance quality with the reverse of the fiscal stimulus. White-corrected standard errors in parentheses. *** and ** indicate significance at 1% and 5% levels, respectively. The maximum number of thresholds has been set to 2. Source: Authors’ calculation.
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Below threshold value 1
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Above threshold value 2
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Angola
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Gabon
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Myanmar
|
Algeria
|
Denmark
|
Israel
|
Saudi Arabia
|
|
Bangladesh
|
Haiti
|
Nicaragua
|
Australia
|
Estonia
|
Jamaica
|
Slovak Republic
|
|
Belarus
|
Iraq
|
Nigeria
|
Austria
|
Finland
|
Malaysia
|
South Korea
|
|
Central African Republic
|
Kenya
|
Republic of Congo
|
Belgium
|
France
|
Mauritius
|
Spain
|
|
Chad
|
Laos
|
Tajikistan
|
Botswana
|
Georgia
|
Namibia
|
Sweden
|
|
Democratic Congo
|
Liberia
|
Tanzania
|
Canada
|
Germany
|
Netherlands
|
Switzerland
|
|
Ecuador
|
Libya
|
Turkmenistan
|
Chile
|
Hong Kong
|
New Zealand
|
United Arab Emirates
|
|
Egypt
|
Malawi
|
Uzbekistan
|
Costa Rica
|
Hungary
|
Norway
|
United Kingdom
|
|
Eswatini
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Mali
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Zimbabwe
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Czech Republic
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Ireland
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Portugal
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Uruguay
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Source: Authors’ calculation.
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Albania
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Burundi
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Egypt
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Hong Kong
|
Latvia
|
Nepal
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Romania
|
Tanzania
|
|
Algeria
|
Cambodia
|
El Salvador
|
Hungary
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Lesotho
|
Netherlands
|
Russia
|
Thailand
|
|
Angola
|
Cameroon
|
Eritrea
|
India
|
Liberia
|
New Zealand
|
Rwanda
|
Togo
|
|
Argentina
|
Canada
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Estonia
|
Indonesia
|
Libya
|
Nicaragua
|
Saudi Arabia
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Trinidad Tobago
|
|
Australia
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Central African Republic
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Eswatini
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Iran
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Lithuania
|
Niger
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Senegal
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Tunisia
|
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Austria
|
Chad
|
Ethiopia
|
Iraq
|
Madagascar
|
Nigeria
|
Serbia
|
Turkey
|
|
Azerbaijan
|
Chile
|
Finland
|
Ireland
|
Malawi
|
Norway
|
Sierra Leone
|
Turkmenistan
|
|
Bahrain
|
China
|
France
|
Israel
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Malaysia
|
Oman
|
Singapore
|
UAE
|
|
Bangladesh
|
Colombia
|
Gabon
|
Italy
|
Mali
|
Pakistan
|
Slovak Republic
|
Uganda
|
|
Belarus
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Costa Rica
|
Gambia
|
Jamaica
|
Mauritania
|
Panama
|
Slovenia
|
UK
|
|
Belgium
|
Cote Ivory
|
Georgia
|
Japan
|
Mauritius
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Papua New Guinea
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South Africa
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Ukraine
|
|
Benin
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Croatia
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Germany
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Jordan
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Mexico
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Paraguay
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South Korea
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United States
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Bolivia
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Cyprus
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Ghana
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Kazakhstan
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Moldova
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Peru
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Spain
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Uruguay
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Bosnia and Herzegovina
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Czech Republic
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Greece
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Kenya
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Mongolia
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Philippines
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Sri Lanka
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Uzbekistan
|
|
Botswana
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Democratic Republic of Congo
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Guatemala
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Kosovo
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Morocco
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Poland
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Sudan
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Vietnam
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|
Brazil
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Denmark
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Guinea
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Kuwait
|
Mozambique
|
Portugal
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Sweden
|
Yemen
|
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Bulgaria
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Dominican Republic
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Haiti
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Kyrgyz Republic
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Myanmar
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Qatar
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Switzerland
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Zambia
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Burkina Faso
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Ecuador
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Honduras
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Laos
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Namibia
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Republic of Congo
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Tajikistan
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Zimbabwe
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|
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June, 2025
II/2025
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