FISCAL POLICY RESPONSES TO INFLATION: COMPARATIVE INSIGHTS FOR DEVELOPING MARKETS

Abstract

Background: Fiscal policy can cushion the social cost of inflation, but it can also prolong price pressure when support is too broad or poorly timed. The policy problem is therefore not whether governments should respond, but how to protect vulnerable households without weakening price signals or fiscal credibility. Aims: This article examines the mechanisms that connect the topic to organizational or policy performance and identifies the conditions that make those mechanisms stronger or weaker. Research Method: A structured narrative review integrates peer-reviewed research with authoritative policy, statistical, and professional sources, including BPS (2026); World Bank (2026). Sources are coded by outcome, mechanism, boundary condition, and practical implication. Results and Conclusion: The synthesis indicates that outcomes are heterogeneous. A single anti-inflation recipe does not travel well across developing markets. Food-heavy consumption baskets, energy subsidies, informal employment and limited administrative capacity change both the transmission of inflation and the practicality of policy instruments. Six recurring themes show that implementation quality, information, capability, and institutional context frequently matter as much as the headline policy or technology. Contribution: The article offers an evidence-based framework for fiscal authorities in developing markets that translates the literature into decision principles without claiming primary data that were not collected.