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Empirical assessment of sustainability and feasibility of government debt: The Philippines case

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  • Qin, Duo
  • Cagas, Marie Anne
  • Ducanes, Geoffrey
  • Magtibay-Ramos, Nedelyn
  • Quising, Pilipinas

Abstract

This paper develops empirical methods of assessing the sustainability and feasibility of public debt using the No Ponzi Game criterion, using the Philippines as the testing case. Both historical data and forecasts generated by a quarterly macro-econometric model are used in the assessment. Stochastic simulations are carried out to mimic future uncertainty. The test results show that, up to the end of the present administration in 2010, the Philippine government debt is not sustainable but weakly feasible, that the feasibility is vulnerable to major adverse shocks, and that simple budgetary deficit control policy is inadequate for achieving debt sustainability or strengthening feasibility.
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  • Qin, Duo & Cagas, Marie Anne & Ducanes, Geoffrey & Magtibay-Ramos, Nedelyn & Quising, Pilipinas, 2006. "Empirical assessment of sustainability and feasibility of government debt: The Philippines case," Journal of Asian Economics, Elsevier, vol. 17(1), pages 63-84, February.
    • Handle: RePEc:eee:asieco:v:17:y:2006:i:1:p:63-84
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    Citations

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    Cited by:

    1. Benjamin E. Diokno, 2007. "Economic and Fiscal Policy Determinants of Public Deficits: The Philippine Case," UP School of Economics Discussion Papers 200702, University of the Philippines School of Economics.
    2. Tang, Chor-Foon & Lau, Evan, 2011. "The Behaviour of Disaggregated Public Expenditures and Income in Malaysia," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 7(01-2), pages 1-13, March.
    3. Chin-Hong Puah Author_Email: chpuah@feb.unimas.my & Evan Lau & Hui-Fern Teo, 2011. "Testing Budget Sustainability In Sarawak State," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-221, Conference Master Resources.
    4. Uryszek Tomasz, 2015. "Long-term Sustainability Of Public Finance In The Central And Eastern EU Member States / Długoterminowe Zrównoważenie Finansów Publicznych w Krajach Europy Środkowej i Wschodniej Należących Do Ue," Comparative Economic Research, Sciendo, vol. 18(4), pages 47-61, December.
    5. Cagas, Marie Anne & Ducanes, Geoffrey & Magtibay-Ramos, Nedelyn & Qin, Duo & Quising, Pilipinas, 2006. "A small macroeconometric model of the Philippine economy," Economic Modelling, Elsevier, vol. 23(1), pages 45-55, January.
    6. Benjamin E. Diokno, 2008. "The Philippines : Fiscal Behavior In Recent History," UP School of Economics Discussion Papers 200804, University of the Philippines School of Economics.
    7. Aleksandras Vytautas Rutkauskas & Viktorija Stasytytė & Nijolė Maknickienė, 2014. "Government debt as the integral portfolio of assets and liabilities generated by debt," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(1), pages 22-40, February.
    8. Ahmad Zubaidi Baharumshah & Evan Lau, 2010. "Mean Reversion Of The Fiscal Conduct In 24 Developing Countries," Manchester School, University of Manchester, vol. 78(4), pages 302-325, July.

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    More about this item

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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