Assessing Fiscal Sustainability: A Cross-Country Comparison

July 1, 2003

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Format: Chicago

Enzo Croce, and V. Hugo Juan-Ramon Assessing Fiscal Sustainability: A Cross-Country Comparison, (USA: International Monetary Fund, 2003) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

To monitor fiscal sustainability, this paper proposes a recursive algorithm derived from the law of motion of the debt-to-GDP ratio, subject to a government reaction function that links convergence to the targeted debt ratio with primary fiscal surpluses. Based on quarterly estimates of this algorithm in the 1990s, 12 developed and developing countries are ranked according to their degree of sustainability. For a number of countries, the paper finds evidence of causality between the fiscal policy stance and growth-adjusted real interest rates.

Subject: Expenditure, Fiscal policy, Fiscal stance, Fiscal sustainability, Public debt

Keywords: Convergence, Debt-ratio gap, Europe, Fiscal policy strategy, Fiscal rule, Fiscal stance, Fiscal sustainability, Ifs algorithm, Reaction function, Target debt ratio, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/145
Stock No:

WPIEA1452003
ISBN:

9781451856569
ISSN:

1018-5941

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