The Determinants of Public Deficit Volatility

Luca Agnello () and Ricardo Jorge Magalhães de Abreu Santos Sousa ()

No 11/2009, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This paper empirically analyzes the political, institutional and economic sources of public deficit volatility. Using the system-GMM estimator for linear dynamic panel data models and a sample of 125 countries analyzed from 1980 to 2006, we show that higher public deficit volatility is typically associated with higher levels of political instability and less democracy. In addition, public deficit volatility tends to be magnified for small countries, in the outcome of hyper-inflation episodes and for countries with a high degree of openness.

Keywords: Public Deficit; Volatility; Political Instability; Institutions. (search for similar items in EconPapers)
JEL-codes: E31 E63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pol
Date: 2009
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Working Paper: The determinants of public deficit volatility (2009)
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