Domestic and International Determinants of the Sustainability of Public Debt

Michael Binder

No 319, Computing in Economics and Finance 2004 from Society for Computational Economics

Abstract: In this paper I investigate the sustainability of public debt in Latin- and South-American economies. To this purpose, a Panel VECM framework is proposed that accounts both for heterogeneities and homogenities of the debt dynamics in these countries, as well as takes account of the interdependecies between these economies and economies in other hemispheres. The estimated Panel VECM model is used to forecast future debt dynamics under alternative fiscal policy scenarios, with extremal events analysis being used to assess the likelihood of insolvency. The results are contrasted with those based on an analysis of intertemporal budget constraints as commonly employed in the literature

Keywords: Public Debt; Dynamic Panels; Extremal Events Analysis; Latin and South America (search for similar items in EconPapers)
JEL-codes: C E (search for similar items in EconPapers)
Date: 2004-08-11

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