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Fiscal Sustainability in Emerging Market Countries with an Application to Ecuador

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  • Díaz Alvarado, Carlos
  • Izquierdo, Alejandro
  • Panizza, Ugo

Abstract

This paper surveys the recent literature on fiscal sustainability, with particular emphasis on emerging market countries. It discusses the main elements that differentiate emerging market countries from industrial countries and then discusses how probabilistic models can help to evaluate fiscal sustainability in an uncertain environment. Based on this discussion, the paper uses Ecuador to illustrate an application of the probabilistic model, and of the framework to evaluate the impact of shocks to current account financing on sustainability.

Suggested Citation

  • Díaz Alvarado, Carlos & Izquierdo, Alejandro & Panizza, Ugo, 2011. "Fiscal Sustainability in Emerging Market Countries with an Application to Ecuador," IDB Publications (Working Papers) 1536, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:1536
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    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.
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    15. Barry Eichengreen & Ricardo Hausmann, 1999. "Exchange rates and financial fragility," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368.
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    Cited by:

    1. Daniel Artana & Fernando Navajas & Marcelo Catena, 2007. "El Shock de los Precios del Petróleo en América Central: Implicancias Fiscales y Energéticas," IDB Publications (Working Papers) 2170, Inter-American Development Bank.
    2. Mişa Ionuț & Kagitci Meral, 2019. "An overview of the influence of some macroeconomic variables on public revenues. A panel approach for a sample of European countries," Management & Marketing, Sciendo, vol. 14(2), pages 249-265, June.
    3. Bi, Huixin & Shen, Wenyi & Yang, Shu-Chun S., 2016. "Fiscal limits in developing countries: A DSGE Approach," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 119-130.
    4. Török László, 2022. "Breakdown of Government Debt into Components in Euro Area Countries," JRFM, MDPI, vol. 15(2), pages 1-13, February.
    5. Canagarajah, Sudharshan & Brownbridge, Martin & Paliu, Anca & Dumitru, Ionut, 2012. "The challenges to long run fiscal sustainability in Romania," Policy Research Working Paper Series 5927, The World Bank.
    6. Markus Eller & Jarmila Urvová, 2012. "How Sustainable Are Public Debt Levels in Emerging Europe?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 48-79.
    7. Huixin Bi & Ms. Susan S. Yang & Ms. Wenyi Shen, 2014. "Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries," IMF Working Papers 2014/049, International Monetary Fund.
    8. Simarmata, Djamester A., 2007. "Keberlanjutan Fiskal di Indonesia [Fiscal Sustainability in Indonesia]," MPRA Paper 41344, University Library of Munich, Germany.
    9. International Monetary Fund, 2010. "Former Yugoslav Republic of Macedonia: Selected Issues for the 2009 Article IV Consultation," IMF Staff Country Reports 2010/020, International Monetary Fund.
    10. Alexis CRUZ-RODRÍGUEZ, 2014. "Assessing fiscal sustainability in some selected countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(6(595)), pages 7-22, June.
    11. Federico Sturzenegger & Nicolás Der Meguerditchian, 2022. "A Balance-Sheet Model of Fiscal Policy in Namibia," Working Papers 136, Red Nacional de Investigadores en Economía (RedNIE).
    12. Angela I. Uwakwe, 2008. "Public Debt Management & Fiscal Sustainability in Italy," AIUB Bus Econ Working Paper Series AIUB-BUS-ECON-2008-20, American International University-Bangladesh (AIUB), Office of Research and Publications (ORP), revised Jun 2008.
    13. María Lorena Marí Del Cristo & Marta Gómez-Puig, 2013. "Fiscal dynamics in a dollarized, oil-exporting country: Ecuador," Working Papers 13-06, Asociación Española de Economía y Finanzas Internacionales.
    14. Campo Robledo, Jacobo, 2011. "Sostenibilidad fiscal: una aproximación con datos panel para 8 países Latinoaméricanos [Fiscal sustainability: A data panel approach for eight Latin American countries]," MPRA Paper 33091, University Library of Munich, Germany.
    15. Silva, Alexandre Manoel Angelo & Cândido Júnior, José Oswaldo, 2010. "É o mercado míope em relação á política fiscal brasileira?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 64(4), December.
    16. Mr. Carlos Mulas-Granados & Mr. Emanuele Baldacci & Mr. Sanjeev Gupta, 2010. "Restoring Debt Sustainability After Crises: Implications for the Fiscal Mix," IMF Working Papers 2010/232, International Monetary Fund.

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    More about this item

    Keywords

    WP-511;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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