International evidence on fiscal solvency: Is fiscal policy "responsible"?
AbstractWe conduct a cross-country empirical analysis of fiscal solvency based on dynamic stochastic general equilibrium conditions. The results show evidence of fiscal solvency, in the form of a robust positive conditional response of the primary balance to changes in public debt, in panels for emerging and industrial economies and in a combined panel. Emerging economies show a stronger response and hence converge to lower mean debt-output ratios, as observed in the data. The results are weaker for countries with debt ratios exceeding panel means and medians. Hence, we can separate countries where fiscal solvency holds from those where it remains in doubt.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 55 (2008)
Issue (Month): 6 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505566
Fiscal solvency Fiscal policy Debt sustainability Sovereign debt;
Other versions of this item:
- Enrique G. Mendoza & Jonathan David Ostry, 2007. "International Evidence on Fiscal Solvency: Is Fiscal Policy "Responsible"?," IMF Working Papers 07/56, International Monetary Fund.
- Enrique G. Mendoza & Jonathan D. Ostry, 2007. "International Evidence on Fiscal Solvency: Is Fiscal Policy "Responsible"?," NBER Working Papers 12947, National Bureau of Economic Research, Inc.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- H6 - Public Economics - - National Budget, Deficit, and Debt
- H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
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