International evidence on fiscal solvency: Is fiscal policy "responsible"?

Enrique Mendoza and Jonathan Ostry

Journal of Monetary Economics, 2008, vol. 55, issue 6, 1081-1093

Abstract: We conduct a cross-country empirical analysis of fiscal solvency based on dynamic stochastic general equilibrium conditions. The results show evidence of fiscal solvency, in the form of a robust positive conditional response of the primary balance to changes in public debt, in panels for emerging and industrial economies and in a combined panel. Emerging economies show a stronger response and hence converge to lower mean debt-output ratios, as observed in the data. The results are weaker for countries with debt ratios exceeding panel means and medians. Hence, we can separate countries where fiscal solvency holds from those where it remains in doubt.

Keywords: Fiscal; solvency; Fiscal; policy; Debt; sustainability; Sovereign; debt (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (222)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(08)00077-9
Full text for ScienceDirect subscribers only

Related works:
Working Paper: International Evidenceon Fiscal Solvency: Is Fiscal Policy "Responsible"? (2007)
Working Paper: International Evidence on Fiscal Solvency: Is Fiscal Policy "Responsible"? (2007)
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:eee:moneco:v:55:y:2008:i:6:p:1081-1093

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().