Fiscal sustainability in BRICS countries: Evidence from asymmetric unit root test augmented with Fourier function

Andrew Phiri

No 1814, Working Papers from Department of Economics, Nelson Mandela University

Abstract: The study’s main focus is to demonstrate the importance of accounting for nonlinearities and unobserved structural breaks in testing for stationary in fiscal budgets. This is achieved by applying the KSS unit root tests augment with a flexible Fourier form to the fiscal budgets of BRICS counties. We find that when unit root tests do not account for structural breaks, the fiscal budgets tend to contain a unit root whereas when structural breaks are considered without accounting for nonlinearities the series ae stationary. Simultaneously accounting for asymmetries and unobserved structural breaks more effectively segregates the data into stationary and nonstationary series.

Keywords: Fiscal budgets; BRICS countries; KSS unit root tests; Flexible Fourier function; Unobserved structural breaks. (search for similar items in EconPapers)
JEL-codes: C5 H6 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2018-03, Revised 2018-03
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Journal Article: Fiscal sustainability in BRICS countries: evidence from asymmetric unit root test augmented with Fourier function (2019)
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