Fiscal fatigue, public debt limits and fiscal space in some MENA countries

Hela Ben Hassine Khalladi ()
Additional contact information
Hela Ben Hassine Khalladi: Faculté des Sciences Economiques et de Gestion de Tunis- Université Tunis El Manar

Economics Bulletin, 2019, vol. 39, issue 2, 1005-1017

Abstract: In the light of the evolution of public debt in some emerging countries during recent years, we have tried to assess debt limits, i.e the threshold from which debt starts to follow an explosive path, according to Ganiko, Melgarejo & Montoro (2016) model. This model was largely inspired from Gosh, Kim Mendoza, Ostry et Qureshi (2013). We have assessed the determinants of the public debt dynamics, the government primary balance as well as the effective cost of debt for 27 emerging countries during the 2000- 2017 period. Results show the existence of a fiscal fatigue, namely the loss of control of the debt accumulation using fiscal adjustments when debt increases. The debt ratio is an important determinant of the effective cost of public debt, since the level of debt increases EMBI Global spreads. Finally, debt limits range between 160 and 220% of GDP for our sample giving evidence of positive fiscal spaces for the four MENA countries used in this paper.

Keywords: Public debt sustainability; fiscal fatigue; fiscal space; fiscal reaction function; MENA (search for similar items in EconPapers)
JEL-codes: E6 F3 (search for similar items in EconPapers)
Date: 2019-05-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I2-P96.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-19-00193

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().