Robust structural determinants of public deficits in developing countries

Blaise Gnimassoun and Isabelle Do Santos

Applied Economics, 2021, vol. 53, issue 9, 1052-1076

Abstract: Many macroeconomic, institutional, demographic, social and political variables have been proposed by previous studies as significant determinants of public deficits in developing countries. This paper asks whether their estimated impact on public deficits is robust under thousands of possible alternative specifications. We deal with model uncertainty using Sala-i-Martin’s Extreme Bound Analysis. Our results clearly show that external shocks, the debt ratio, financial development, the level of democracy and government control over expenditures are robustly associated with fiscal deficits. Public deficits are lower in countries which provide better stability of public expenditure in the face of revenue instability and which are less exposed to negative external shocks. In contrast, fiscal deficits increase with the debt ratio, financial development and the level of democracy. The relative importance of external shocks in all the regressions argues in favour of greater economic diversification in order to mitigate the impact of negative shocks on public finances.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2020.1824063 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Robust structural determinants of public deficits in developing countries (2021)
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:taf:applec:v:53:y:2021:i:9:p:1052-1076

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2020.1824063

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().