IDEAS home Printed from https://ideas.repec.org/a/wsi/medjxx/v02y2010i02ns1793812010000228.html
   My bibliography  Save this article

Sustainability Of Mena Public Debt And The Macroeconomic Implications Of The Recent Global Financial Crisis

Author

Listed:
  • SIMON NEAIME

    (Department of Economics, American University of Beirut, Bliss Street, Hamma, P. O. Box 11 0236 Beirut, Lebanon)

Abstract

In the wake of the recent US financial crisis and after the accumulation of sizeable public debts, especially in the emerging MENA countries of Egypt, Jordan, Morocco, Tunisia, and Turkey, the financial distress of the public sector has become a major source of concern for policymakers in the region. Using time series econometric tests, and the Present Value Constraint model, this study examines the sustainability of MENA public debt. The empirical results point to strong sustainability of fiscal policies in Tunisia, weak sustainability in Egypt, mixed results for Morocco, and unsustainable debt and fiscal policies in Jordan and Turkey. It is argued that the acceleration of fiscal reforms in the latter group of MENA countries is urgently needed; otherwise, those countries may experience further increases in an already large public debt, and more pressure on exchange and interest rates, with further macroeconomic imbalances. It is also argued that the recent global financial crisis is expected to put further strains on Jordan's debt sustainability given its limited fiscal space and high debt to GDP ratio.

Suggested Citation

  • Simon Neaime, 2010. "Sustainability Of Mena Public Debt And The Macroeconomic Implications Of The Recent Global Financial Crisis," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 177-201.
    • Handle: RePEc:wsi:medjxx:v:02:y:2010:i:02:n:s1793812010000228
    DOI: 10.1142/S1793812010000228
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1793812010000228
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S1793812010000228?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2007. "Currency Mismatches, Debt Intolerance, and the Original Sin: Why They Are Not the Same and Why It Matters," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 121-170, National Bureau of Economic Research, Inc.
    2. Ahmed, Shaghil & Rogers, John H., 1995. "Government budget deficits and trade deficits Are present value constraints satisfied in long-term data?," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 351-374, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abderrahim Chibi & Sidi Mohamed Chekouri & Mohamed Benbouziane, 2019. "Debt sustainability, structural breaks and nonlinear fiscal adjustment: empirical evidence from Algeria," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(4), pages 369-397, December.
    2. Neaime, Simon, 2015. "Sustainability of budget deficits and public debts in selected European Union countries," The Journal of Economic Asymmetries, Elsevier, vol. 12(1), pages 1-21.
    3. Zeineb Gouasmi & Riadh El Ferktaji, 2022. "Detecting and date-stamping unsustainability: The case of Tunisian Budget Deficit," Economics Bulletin, AccessEcon, vol. 42(4), pages 2065-2078.
    4. Neaime, Simon & Gaysset, Isabelle, 2017. "Sustainability of macroeconomic policies in selected MENA countries: Post financial and debt crises," Research in International Business and Finance, Elsevier, vol. 40(C), pages 129-140.
    5. Olumide Olusegun Olaoye & Phillip A. Olomola, 2023. "Sub‐Saharan Africa's rising public debt stock: Is there a cause for concern?," South African Journal of Economics, Economic Society of South Africa, vol. 91(1), pages 85-115, March.
    6. Neaime, Simon, 2015. "Twin deficits and the sustainability of public debt and exchange rate policies in Lebanon," Research in International Business and Finance, Elsevier, vol. 33(C), pages 127-143.
    7. Ankudinov, Andrei & Ibragimov, Rustam & Lebedev, Oleg, 2017. "Sanctions and the Russian stock market," Research in International Business and Finance, Elsevier, vol. 40(C), pages 150-162.
    8. Zeineb Gouasmi & Houda Haffoudhi, 2020. "Analysis of Sustainability of Fiscal Policy and Democratic Transition: Case of Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(2), pages 512-529, June.
    9. Olaoye, Olumide Olusegun & Olomola, P.A., 2022. "Empirical analysis of asymmetry phenomenon in the public debt structure of Sub-Saharan Africa's five biggest economies: A Markov-Switching model," The Journal of Economic Asymmetries, Elsevier, vol. 25(C).
    10. Samia Omrane Belguith & Foued Badr Gabsi, 2019. "Public Debt Sustainability in Tunisia: Empirical Evidence Estimating Time-Varying Parameters," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 550-560, June.
    11. Bijoy Chandra Das & Fakhrul Hasan & Soma Rani Sutradhar & Sujana Shafique, 2023. "Ukraine–Russia Conflict and Stock Markets Reactions in Europe," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(3), pages 395-407, September.
    12. Sidi Mohammed Chekouri & Abderrahim Chibi & Mohamed Benbouziane, 2024. "Public debt dynamics and fiscal sustainability in selected North African countries: new evidence from recurrent explosive behavior tests and quantile unit root analysis," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-27, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. António Afonso & Florence Huart & João Tovar Jalles & Piotr Stanek, 2019. "Assessing the sustainability of external imbalances in the European Union," The World Economy, Wiley Blackwell, vol. 42(2), pages 320-348, February.
    2. Chen, Shyh-Wei & Xie, Zixiong, 2015. "Testing for current account sustainability under assumptions of smooth break and nonlinearity," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 142-156.
    3. Martin Melecky, 2012. "Choosing The Currency Structure Of Foreign‐Currency Debt: A Review Of Policy Approaches," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(2), pages 133-151, March.
    4. M, Ramachandran & Maheswari, D., 2022. "Asymmetry in forex market intervention: Does it reflect fear of reserve inadequacy?," The Journal of Economic Asymmetries, Elsevier, vol. 25(C).
    5. Zhang, Dalu, 2014. "Vine copulas and applications to the European Union sovereign debt analysis," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 46-56.
    6. Kate Kisselev & Frank Packer, 2006. "Minding the gap in Asia: foreign and local currency ratings," BIS Papers chapters, in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 174-199, Bank for International Settlements.
    7. Philip R. Lane & Jay C. Shambaugh, 2010. "Financial Exchange Rates and International Currency Exposures," American Economic Review, American Economic Association, vol. 100(1), pages 518-540, March.
    8. Bruce N. Lehmann & David M. Modest, 1985. "The Empirical Foundations of the Arbitrage Pricing Theory I: The Empirical Tests," NBER Working Papers 1725, National Bureau of Economic Research, Inc.
    9. Aizenman, Joshua & Sun, Yi, 2012. "The financial crisis and sizable international reserves depletion: From ‘fear of floating’ to the ‘fear of losing international reserves’?," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 250-269.
    10. Eiji Fujii, 2024. "Currency concentration in sovereign debt, exchange rate cyclicality, and volatility in consumption," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(1), pages 169-192, February.
    11. Brutti, Filippo, 2008. "Legal enforcement, public supply of liquidity and sovereign risk," MPRA Paper 13949, University Library of Munich, Germany.
    12. Markus Kirchner & Malte Rieth, 2021. "Sovereign Default Risk, Macroeconomic Fluctuations and Monetary–Fiscal Stabilization," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(2), pages 391-426, June.
    13. Furceri, Davide & Zdzienicka, Aleksandra, 2012. "How costly are debt crises?," Journal of International Money and Finance, Elsevier, vol. 31(4), pages 726-742.
    14. Karsten Kohler & Engelbert Stockhammer, 2023. "Flexible exchange rates in emerging markets: shock absorbers or drivers of endogenous cycles?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 551-572.
    15. Antonia López-Villavicencio & Marc Pourroy, 2017. "IT Countries: A Breed Apart? the case of Exchange Rate Pass-Through," Working Papers 1728, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    16. Bertocco Giancarlo & Fanelli Luca & Paruolo Paolo, 2002. "On the determinants of inflation in Italy: evidence of cost-push effects before the European Monetary Union," Economics and Quantitative Methods qf0223, Department of Economics, University of Insubria.
    17. Bordo, Michael D. & Meissner, Christopher M. & Stuckler, David, 2010. "Foreign currency debt, financial crises and economic growth: A long-run view," Journal of International Money and Finance, Elsevier, vol. 29(4), pages 642-665, June.
    18. Husnu C. Dalgic, 2018. "Financial Dollarization in Emerging Markets: An Insurance Arrangement," CRC TR 224 Discussion Paper Series crctr224_051_2018, University of Bonn and University of Mannheim, Germany.
    19. Dimic, Nebojsa & Piljak, Vanja & Swinkels, Laurens & Vulanovic, Milos, 2021. "The structure and degree of dependence in government bond markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    20. Galindo, Arturo J. & Panizza, Ugo, 2018. "The cyclicality of international public sector borrowing in developing countries: Does the lender matter?," World Development, Elsevier, vol. 112(C), pages 119-135.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:medjxx:v:02:y:2010:i:02:n:s1793812010000228. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/medj/medj.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.