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Fiscal Space and Estimating Methods

Author

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  • Fatih AKBAYIR
  • Ahmet Burçin YERELİ

Abstract

In this paper, it is aimed to examine the estimating methods of the fiscal space, which is a concept that governments focus in recent years. In this direction, six fiscal space estimating methods are explained theoretically. Besides, it is tried to evaluate these methods in terms of advantages and disadvantages through a comparative analysis. It is also examined the risks associated with the methods. As a result, it can be said that incorrect measures of fiscal space may have negative effects on many important factors, from the development stages of the countries to the macro indicators. In addition, considering that the fiscal space of the countries is affected by many economic and noneconomic factors, Ostry et al. (2010) approach attracts considerable attention. Because it takes more account of the general equilibrium situation.

Suggested Citation

  • Fatih AKBAYIR & Ahmet Burçin YERELİ, 2018. "Fiscal Space and Estimating Methods," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(38).
    • Handle: RePEc:sos:sosjrn:180414
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    References listed on IDEAS

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    1. Atish R. Ghosh & Jun I. Kim & Enrique G. Mendoza & Jonathan D. Ostry & Mahvash S. Qureshi, 2013. "Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies," Economic Journal, Royal Economic Society, vol. 0, pages 4-30, February.
    2. World Bank, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador : A Fiscal Management and Public - Expenditure Review," World Bank Publications - Books, The World Bank Group, number 7296, December.
    3. Joshua Aizenman & Yothin Jinjarak, 2010. "De facto Fiscal Space and Fiscal Stimulus: Definition and Assessment," NBER Working Papers 16539, National Bureau of Economic Research, Inc.
    4. De Grauwe, Paul & Ji, Yuemei, 2013. "Self-fulfilling crises in the Eurozone: An empirical test," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 15-36.
    5. Aizenman, Joshua & Hutchison, Michael & Jinjarak, Yothin, 2013. "What is the risk of European sovereign debt defaults? Fiscal space, CDS spreads and market pricing of risk," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 37-59.
    6. Mr. Peter S. Heller, 2005. "Understanding Fiscal Space," IMF Policy Discussion Papers 2005/004, International Monetary Fund.
    7. Ghosh, Atish R. & Ostry, Jonathan D. & Qureshi, Mahvash S., 2013. "Fiscal space and sovereign risk pricing in a currency union," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 131-163.
    8. Mr. Olumuyiwa S Adedeji & Mr. Calixte Ahokpossi & Claudio Battiati & Mrs. Mai Farid, 2016. "A Probabilistic Approach to Fiscal Space and Prudent Debt Level: Application to Low-Income Developing Countries," IMF Working Papers 2016/163, International Monetary Fund.
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    More about this item

    Keywords

    Fiscal Sustainability; Fiscal Risk; Fiscal Space; Ostry et al. Approach; Debt Dynamics.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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