Sustainability of Latin American fiscal deficits: a panel data approach

Jacobo Campo-Robledo () and Luis Melo-Velandia
Authors registered in the RePEc Author Service: Jacobo Alberto Campo Robledo

Empirical Economics, 2015, vol. 49, issue 3, 889-907

Abstract: This paper evaluates the fiscal sustainability hypothesis for eight Latin American countries for the period 1960–2009: Argentina, Chile, Colombia, Ecuador, Panama, Peru, Paraguay and Uruguay. Using second-generation cointegration panel data models, we test whether government revenues and primary expenditures are sustainable in the long run. This methodology allows for cross-sectional dependence among countries and is appropriate under the existence of potential structural breaks. We found empirical evidence of fiscal sustainability for these Latin American countries but only in a weak sense. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Fiscal sustainability; Panel unit root tests; Panel cointegration tests; Structural change; C22; C23; H62 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Working Paper: Sustainability of Latin American Fiscal Deficits: A Panel Data Approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:49:y:2015:i:3:p:889-907

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DOI: 10.1007/s00181-014-0905-8

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