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Sustainability of the Fiscal Process in Developing Countries- Egypt, Iran and Turkey: A Multicointegration Approach

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Author Info
Amir Kia () (Department of Finance and Economics, Utah Valley University)
Abstract

This paper investigates the fiscal sustainability of three developing countries ? Egypt, Iran and Turkey ? for both stochastic and non-stochastic environments. Both cointegration and multicointegration methodologies were used to evaluate fiscal budgeting processes in these countries. A model for testing the sustainability of a fiscal policy, based on Barro’s tax smoothing, was also developed to test the Iranian fiscal policy. It was found that the fiscal budgeting process in Egypt and Turkey is weakly sustainable, but not in Iran. However, the Iranian fiscal policy, as far as oil and gas income is concerned, is a responsible, but not a fully responsible policy.

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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 05-08.

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Length: 48 pages
Date of creation: Sep 2005
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Publication status: Published: Carleton Economic Paper
Handle: RePEc:car:carecp:05-08

Note: JEL codes: H60, E62, C32
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Keywords: fiscal sustainability; multicointegration and tax smoothing;

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