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The Determinants of Public Deficit Volatility

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  • Luca Agnello

    ()
    (University of Palermo, Department of Economics, Business and Finance)

  • Ricardo M. Sousa

    ()
    (Universidade do Minho - NIPE)

Abstract

This paper empirically analyzes the political, institutional and economic sources of public deficit volatility. Using the system-GMM estimator for linear dynamic panel data models and a sample of 125 countries analyzed from 1980 to 2006, we show that higher public deficit volatility is typically associated with higher levels of political instability and less democracy. In addition, public deficit volatility tends to be magnified for small countries, in the outcome of hyper-inflation episodes and for countries with a high degree of openness.

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Bibliographic Info

Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 11/2009.

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Date of creation: 2009
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Handle: RePEc:nip:nipewp:11/2009

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Keywords: Public Deficit; Volatility; Political Instability; Institutions.;

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Citations

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Cited by:
  1. Eugenia-Ramona Mara, 2012. "Determinants of fiscal budget volatility in old versus new EU member states," Working Papers Department of Economics 2012/31, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  2. Serhan Cevik & Katerina Teksoz, 2014. "Deep Roots of Fiscal Behavior," IMF Working Papers 14/45, International Monetary Fund.
  3. Anwar, Mumtaz & Ahmad, Munazza, 2012. "Political determinants of budget deficit in Pakistan: An empirical investigation," HWWI Research Papers 135, Hamburg Institute of International Economics (HWWI).
  4. Emilia Câmpeanu & Andreea Stoian, 2010. "Fiscal Policy Reaction in the Short Term for Assessing Fiscal Sustainability in the Long Runin Central and Eastern European Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 60(6), pages 501-518, December.
  5. Luca Agnello & Ricardo M. Sousa, 2011. "Fiscal Consolidation and Income Inequality," NIPE Working Papers 34/2011, NIPE - Universidade do Minho.
  6. L, Agnello. & R, M. Sousa., 2012. "How does Fiscal Consolidation Impact on Income Inequality?," Working papers 382, Banque de France.

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