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Sustainability of the Fiscal Process in Developing Countries- Egypt, Iran and Turkey: A Multicointegration Approach – revised version: Fiscal Sustainability in Emerging Countries: Evidence from Iran and Turkey

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Abstract

This paper investigates the fiscal sustainability of three developing countries ? Egypt, Iran and Turkey ? for both stochastic and non-stochastic environments. Both 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 Egypt and Turkey is weakly sustainable, but not in Iran. However, the Iranian fiscal policy, as far as oil and gas income is concerned, is a responsible, but not a fully responsible policy.

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  • Amir Kia, 2005. "Sustainability of the Fiscal Process in Developing Countries- Egypt, Iran and Turkey: A Multicointegration Approach – revised version: Fiscal Sustainability in Emerging Countries: Evidence from Iran a," Carleton Economic Papers 05-08, Carleton University, Department of Economics, revised Nov 2008.
  • Handle: RePEc:car:carecp:05-08
    Note: JEL codes: H60, E62, C32
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    Keywords

    fiscal sustainability; multicointegration and tax smoothing;

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