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A large literature has documented that fiscal policy is procyclical in emerging markets/developing countries and acyclical/countercyclical in advanced economies. This
paper analyzes fiscal procyclicality in commodity-exporting countries. The paper
makes two novel contributions. First, based on the "when it rains, it pours" phenomenon (that is, contractionary fiscal policy amplifies the business cycle), the paper
shows that, on average, government spending magnifies the business cycle by 21 percent
of the initial drop in output following a fall in commodity prices. Second, the paper estimates the welfare costs of fiscal procyclicality at 36 percent of the commodity business cycle.
