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Fiscal sustainability in emerging countries: Evidence from Iran and Turkey

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  • Kia, Amir

Abstract

This paper investigates the fiscal sustainability of two emerging countries - Iran (an oil-producing country) and Turkey (an agricultural country) - for both stochastic and non-stochastic environments. 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 both countries is not sustainable. Furthermore, the Iranian fiscal policy, as far as oil and gas income is concerned, is not a fully responsible policy.

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  • Kia, Amir, 2008. "Fiscal sustainability in emerging countries: Evidence from Iran and Turkey," Journal of Policy Modeling, Elsevier, vol. 30(6), pages 957-972.
  • Handle: RePEc:eee:jpolmo:v:30:y:2008:i:6:p:957-972
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    Cited by:

    1. Meltem Ucal & Asli Alici, 2010. "Is Fiscal Policy Sustainable in Turkey?," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 46(0), pages 83-93, May.
    2. Gomez-Biscarri, Javier & Hualde, Javier, 2015. "A residual-based ADF test for stationary cointegration in I(2) settings," Journal of Econometrics, Elsevier, vol. 184(2), pages 280-294.
    3. Hui, Hon Chung, 2013. "Fiscal sustainability in Malaysia: a re-examination," MPRA Paper 80018, University Library of Munich, Germany.
    4. Chen, Shyh-Wei, 2014. "Testing for fiscal sustainability: New evidence from the G-7 and some European countries," Economic Modelling, Elsevier, vol. 37(C), pages 1-15.
    5. Salem KANOUN, 2014. "The Sustainability of Fiscal Adjustment Process : A Quantitative Approach With an Application to Tunisia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(10), pages 1314-1331, October.
    6. María Lorena Marí del Cristo & Marta Gómez-Puig, 2013. "“Fiscal sustainability and fiscal shocks in a dollarized and oil-exporting country: Ecuador”," IREA Working Papers 201306, University of Barcelona, Research Institute of Applied Economics, revised Apr 2013.
    7. Lees, Kirdan, 2013. "Fighting fit? Assessing New Zealand’s fiscal sustainability," NZIER Working Paper 2013/5, New Zealand Institute of Economic Research.
    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.
    9. Mahdavi, Saeid & Westerlund, Joakim, 2011. "Fiscal stringency and fiscal sustainability: Panel evidence from the American state and local governments," Journal of Policy Modeling, Elsevier, vol. 33(6), pages 953-969.
    10. El Anshasy, Amany A. & Bradley, Michael D., 2012. "Oil prices and the fiscal policy response in oil-exporting countries," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 605-620.
    11. 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.
    12. Trachanas, Emmanouil & Katrakilidis, Constantinos, 2013. "Fiscal deficits under financial pressure and insolvency: Evidence for Italy, Greece and Spain," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 730-749.
    13. Günçavdi, Öner & Küçük, Ali Erhan, 2013. "Investment expenditure and capital accumulation in an inflationary environment: The case of Turkey," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 554-571.
    14. Escario, Regina & Gadea, María Dolores & Sabaté, Marcela, 2012. "Multicointegration, seigniorage and fiscal sustainability. Spain 1857–2000," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 270-283.

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