Sustainability of Latin American Fiscal Deficits: A Panel Data Approach
AbstractThis paper evaluates the fiscal sustainability hypothesis for eight Latin Americancountries for the period 1960 - 2009: Argentina, Chile, Colombia, Ecuador, Panama, Peru, Paraguayand Uruguay. Using second generation cointegration panel data models, we test whether governmentrevenues and primary expenditures are sustainable in the long run. This methodology allowsfor cross-sectional dependence among countries and is appropriate under the existence of potentialstructural breaks. We found empirical evidence of sustainability of the primary deficit for theseLatin American countries but only in a weak sense.
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Bibliographic InfoPaper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number 009106.
Date of creation: 12 Dec 2011
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Fiscal Sustainability; Panel Unit Root tests; Panel Cointegration tests; Structural Change.;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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