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Fiscal Vulnerability and Financial Crises in Emerging Market Economies

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  • Richard Hemming
  • Axel Schimmelpfennig
  • Michael Kell

Abstract

Fiscal problems have long been considered a central feature of financial--that is, currency, debt, and banking--crises. This paper addresses four questions: What are the fiscal causes of crises? Which fiscal vulnerability indicators help to predict crises? Can fiscal variables explain the severity of crises? And what are the fiscal consequences of crises? Its findings are based on statistical analysis of a large data set of fiscal variables for 29 emerging market economies over 1970-2000 and detailed case studies of 11 emerging market crises during the 1990s that focus on structural and institutional dimensions of fiscal vulnerability.

Suggested Citation

  • Richard Hemming & Axel Schimmelpfennig & Michael Kell, 2003. "Fiscal Vulnerability and Financial Crises in Emerging Market Economies," IMF Occasional Papers 218, International Monetary Fund.
  • Handle: RePEc:imf:imfocp:218
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    Cited by:

    1. Luis Ignacio Jácome, 2004. "The Late 1990's Financial Crisis in Ecuador; Institutional Weaknesses, Fiscal Rigidities, and Financial Dollarization At Work," IMF Working Papers 04/12, International Monetary Fund.
    2. Garima Vasishtha & Taimur Baig & Manmohan S. Kumar & Edda Zoli, 2006. "Fiscal and Monetary Nexus in Emerging Market Economies; How Does Debt Matter?," IMF Working Papers 06/184, International Monetary Fund.
    3. Sun, Lixin, 2015. "China’s Debt: Structure, Determinants and Sustainability," MPRA Paper 68548, University Library of Munich, Germany, revised Oct 2015.
    4. Stéphanie Pamies Sumner & Katia Berti, 2017. "A Complementary Tool to Monitor Fiscal Stress in European Economies," European Economy - Discussion Papers 2015 - 049, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Caroline Rijckeghem & Beatrice Weder, 2009. "Political institutions and debt crises," Public Choice, Springer, vol. 138(3), pages 387-408, March.
    6. Albert Jaeger & Ludger Schuknecht, 2007. "Boom-Bust Phases in Asset Prices and Fiscal Policy Behavior," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(6), pages 45-66, November.
    7. Natia KUTIVADZE, 2011. "Public debt, domestic and external financing, and economic growth," Departmental Working Papers 2011-12, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    8. Pablo Hernández de Cos & Enrique Moral-Benito & Gerrit B. Koester & Christiane Nickel, 2014. "Signalling fiscal stress in the euro area: A country-specific early warning system," Working Papers 1418, Banco de España;Working Papers Homepage.
    9. Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
    10. Sanjeev Gupta & Emanuele Baldacci & Benedict Clements & Erwin R. Tiongson, 2005. "What sustains fiscal consolidations in emerging market countries?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 10(4), pages 307-321.
    11. Porzecanski, Arturo C., 2009. "Latin America: The Missing Financial Crisis," MPRA Paper 18780, University Library of Munich, Germany.
    12. Andrew Berg & Eduardo Borensztein & Catherine Pattillo, 2005. "Assessing Early Warning Systems: How Have They Worked in Practice?," IMF Staff Papers, Palgrave Macmillan, vol. 52(3), pages 1-5.
    13. Bodrova, Vera & Gvozdeva, Margarita & Kazakova, Maria, 2015. "Methods of Long-term Forecasting: Comparative Analysis and Foreign Experience of Applying," Published Papers 2310, Russian Presidential Academy of National Economy and Public Administration.
    14. Haizhou Huang & Danyang Xie, 2008. "Fiscal Sustainability and Fiscal Soundness," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 239-251, November.
    15. Kazakova, Maria & Trunin, Pavel, 2015. "Long-Term Prognosis of Basic Demographic and Macroeconomic Indicators in Russia," Published Papers 2308, Russian Presidential Academy of National Economy and Public Administration.
    16. Rudolf Alvise Lennkh & Edmund Moshammer & Vilém Valenta, 2017. "A Comprehensive Scorecard for Assessing Sovereign Vulnerabilities," Working Papers 23, European Stability Mechanism.
    17. Alessandro Zanello & Mark R. Stone & Christopher J. Jarvis & Andrew Berg, 2003. "Re-Establishing Credible Nominal Anchors After a Financial Crisis; A Review of Recent Experience," IMF Working Papers 03/76, International Monetary Fund.
    18. Bjoern Rother & Ivetta Hakobyan & Monica B de Bolle, 2006. "The Level and Composition of Public Sector Debt in Emerging Market Crises," IMF Working Papers 06/186, International Monetary Fund.
    19. International Monetary Fund, 2014. "Sri Lanka; Selected Issues," IMF Staff Country Reports 14/286, International Monetary Fund.
    20. repec:gam:jsusta:v:10:y:2018:i:7:p:2482-:d:158222 is not listed on IDEAS
    21. César Calderón & J. Rodrigo Fuentes, 2013. "Government Debt and Economic Growth," IDB Publications (Working Papers) 4641, Inter-American Development Bank.
    22. Kazakova, Maria & Nesterova, Kristina, 2015. "Long-Term Forecast of the Main Parameters of the Budgetary System of Russia," Published Papers 2309, Russian Presidential Academy of National Economy and Public Administration.
    23. World Bank, 2005. "Philippines : From Short-Term Growth to Sustained Development," World Bank Other Operational Studies 8552, The World Bank.

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