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Fiscal sustainability in BRICS countries: Evidence from asymmetric unit root test augmented with Fourier function

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  • Andrew Phiri

    (Department of Economics, Nelson Mandela University)

Abstract

The study’s main focus is to demonstrate the importance of accounting for nonlinearities and unobserved structural breaks in testing for stationary in fiscal budgets. This is achieved by applying the KSS unit root tests augment with a flexible Fourier form to the fiscal budgets of BRICS counties. We find that when unit root tests do not account for structural breaks, the fiscal budgets tend to contain a unit root whereas when structural breaks are considered without accounting for nonlinearities the series ae stationary. Simultaneously accounting for asymmetries and unobserved structural breaks more effectively segregates the data into stationary and nonstationary series.

Suggested Citation

  • Andrew Phiri, 2018. "Fiscal sustainability in BRICS countries: Evidence from asymmetric unit root test augmented with Fourier function," Working Papers 1814, Department of Economics, Nelson Mandela University, revised Mar 2018.
    • Handle: RePEc:mnd:wpaper:1814
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Fiscal budgets; BRICS countries; KSS unit root tests; Flexible Fourier function; Unobserved structural breaks.;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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