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Sustainability of Latin American Fiscal Deficits: A Panel Data Approach

Jacobo Campo Robledo () and Luis Melo-Velandia ()

BORRADORES DE ECONOMIA from BANCO DE LA REPÚBLICA

Abstract: This paper evaluates the fiscal sustainability hypothesis for eight Latin Americancountries for the period 1960 - 2009: Argentina, Chile, Colombia, Ecuador, Panama, Peru, Paraguayand Uruguay. Using second generation cointegration panel data models, we test whether governmentrevenues and primary expenditures are sustainable in the long run. This methodology allowsfor cross-sectional dependence among countries and is appropriate under the existence of potentialstructural breaks. We found empirical evidence of sustainability of the primary deficit for theseLatin American countries but only in a weak sense.

Keywords: Fiscal Sustainability; Panel Unit Root tests; Panel Cointegration tests; Structural Change. (search for similar items in EconPapers)
JEL-codes: C22 C23 H62 (search for similar items in EconPapers)
Pages: 16
Date: 2011-12-12
New Economics Papers: this item is included in nep-lam
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Journal Article: Sustainability of Latin American fiscal deficits: a panel data approach (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:col:000094:009106

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