How Sustainable are Latin American Fiscal Deficits: A Panel Data Approach
AbstractThis paper evaluates the fiscal sustainability hypothesis for eight Latin American countries, Argentina, Chile, Colombia, Ecuador, Panama, Peru, Paraguay and Uruguay, during the period 1960 - 2009. Using second generation cointegration panel data models, we test whether Government revenues and primary expenditures are sustainable in the long-run. This methodology allows for cross-sectional dependence among countries and is also appropriated under the existence of potential structural breaks. We found empirical evidence of sustainability of the primary deficit for these Latin American countries but only in a weak sense.
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Bibliographic InfoPaper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 679.
Date of creation: Nov 2011
Date of revision:
Fiscal Sustainability; Panel Unit Root tests; Panel Cointegration tests; Structural Change. Classification JEL:C22; C23; H62.;
Find related papers by JEL classification:
- Str - - - - - -
- Cha - Mathematical and Quantitative Methods - - - - -
- Cla - Mathematical and Quantitative Methods - - - - -
- JEL - Labor and Demographic Economics - - - - -
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-02 (All new papers)
- NEP-LAM-2012-05-02 (Central & South America)
- NEP-PUB-2012-05-02 (Public Finance)
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