A toolkit to assess fiscal vulnerabilities and risks in advanced economies

Andrea Schaechter, C. Emre Alper, Elif Arbatli (), Carlos Caceres, Giovanni Callegari, Marc Gerard, Jiri Jonas, Tidiane Kinda, Anna Shabunina and Anke Weber

Applied Economics, 2014, vol. 46, issue 6, 650-660

Abstract: This article presents a range of tools and indicators for analysing fiscal vulnerabilities and risks for advanced economies. The analysis covers key short-, medium- and long-term dimensions. Short-term pressures are captured by assessing (i) gross funding needs, (ii) market perceptions of default risk and (iii) stress dependence among sovereigns. Medium- and long-term pressures are summarized by (iv) medium- and long-term budgetary adjustment needs, (v) susceptibility of debt projections to growth and interest rate shocks and (vi) stochastic risks to medium-term debt dynamics. Aiming to cover a wide range of advanced economies and minimize data lags, has also influenced the selection of empirical methods. Due to these features, they can, for example, help inform the joint IMF--FSB Early Warning Exercise (EWE) on the fiscal dimensions of economic risks.

Date: 2014
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DOI: 10.1080/00036846.2013.861589

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