Debt sustainability in emerging market countries: Some policy guidelines from a fan-chart approach

Paret, Anne-Charlotte

doi:10.1016/j.econmod.2017.01.010

Cited by 24 publications

(29 citation statements)

References 32 publications

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“…In addition, Paret (2017), using a probabilistic approach for simulation of medium-term public debt of emerging countries with emphasis on the difference cyclical fiscal policies, took into account the additional risk of the external debt. The results made three recommendations i) a country should consider decreasing its exposure to currency risk only in extreme cases; ii) on the contrary, greater fiscal responsiveness (i.e.…”

Section: Literature Reviewmentioning

confidence: 99%

Public debt and private consumption in Asia Pacific countries: Is there evidence for Ricardian equivalence?

Kusairi¹,

Maulina²,

Margaretha³

2019

Journal of International Studies

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The study analyses the effect of public debt on private consumption. It indirectly tests whether a Ricardian equivalence proposition exists in differentiated financial development for the yearly data of 18 Asia Pacific countries from 1990 to 2017 using dynamic heterogeneous panel data analysis. The results allow concluding that public debt and private consumption have a long-term co-integrated relationship, and in the general approach, Ricardian equivalence does exist in both long and short term. This implies that an increase in public debt does not increase private consumption because consumers expect governments to raise taxes to service debt such as principal and interest payments. But under the traditional approach Ricardian equivalence does not exist, thus, public debt does affect private consumption. In addition, income, capital accumulation, government expenditure, real interest rate and inflation have a positive effect on private consumption. The key implication of these results is that financial development does not provide evidence for the existence of Ricardian equivalence as it does not have a different effect for different countries.

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Section: Literature Reviewmentioning

confidence: 99%

Public debt and private consumption in Asia Pacific countries: Is there evidence for Ricardian equivalence?

Kusairi¹,

Maulina²,

Margaretha³

2019

Journal of International Studies

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“…After the collapse of Lehman Brothers in 2008 and the end of the Great Moderation, the sovereign debt of a number of countries started to pile up at high speed (see Paret, 2007, among many others). In the European Union this was a consequence of the introduction of expansionary fiscal policies to reverse the effects of the downturn (EC, 2009).…”

Section: Introductionmentioning

confidence: 99%

On the dynamics of sovereign debt in China: Sustainability and structural change

Cuestas

Regis

2018

Economic Modelling

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The dynamics of public debt are an important determinant of the macroeconomic environment of an economy and of the investment climate in the private sector. There have been concerns recently about the sustainability of debt in China, given the surge in the fiscal deficit in the last few years that has aided economic activity. This paper aims to shine some light on the dynamics of public debt in the Chinese economy given the risk of a debt crisis, taking nonlinearities and structural breaks into account. Our results show that caution needs to be exercised as there was a clear trend in 2014 towards an unsustainable path in the debt-to-GDP ratio.

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“…Moreover, Edo, Osadolor & Dading (2019) argue that external debt and exports have a significant and negative impact on economic growth in Sub-Saharan Africa. In contrast, Paret (2017)…”

Section: Figure 1 External Debt Sustainability In Seven Selected Asean Countriesmentioning

confidence: 90%

“…Macroeconomic data consist of GDP growth, inflation, FDI inflows, exchange rate and real interest rate. The data were used by previous studies, such as GDP growth (Fournier & Fall, 2017;Kersan-Skabic, 2017;and Beqiraj, Fedeli & Forte, 2018;and Edo, Osadolor & Dading, 2019), interest rate (Fournier & Fall, 2017;Kersan-Skabic, 2017;and Beqiraj, Fedeli & Forte, 2018), domestic investment, foreign investment, and inflation (Onafowora & Owoye, 2019), and exchange rate (Paret, 2017).…”

Section: Empirical Model Datasetmentioning

confidence: 99%

External Debt Sustainability in Selected ASEAN Countries: Do Macroeconomic Data and Institutions Matter?

Cahyadin¹

2021

j. ekon. terap.

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Studi ini akan mengukur indikator hutang luar negeri yang berkelanjutan di tujuh negara ASEAN selama 1996-2017 menggunakan indicator-based model. Uji kointegrasi panel diterapkan untuk mengestimasi dampak indikator makroekonomi dan kelembagaan terhadap hutang luar negeri yang berkelanjutan. Terdapat dua indikator hutang luar negeri yang berkelanjutan, yaitu: (a) EDS1 – yang menunjukkan tingkat pertumbuhan hutang luar negeri lebih rendah dibandingkan dengan pertumbuhan GDP, dan (b) EDS2 – yang menunjukkan pertumbuahn GDP lebih besar dibandingkan dengan tingkat bunga riil. Temuan-temuan studi menunjukkan bahwa indikator makroekonomi dan beberapa indikator kelembagaan berdampak signifikan terhadap EDS1 sedangkan makroekonomi indikator – seperti pertumbuhan GDP, inflasi dan FDI inflows – dan satu indikator kelembagaan – seperti efektivitas pemerintah – berdampak signifikan terhadap EDS2 dalam jangka pendek. Speed of adjustment berdampak signifikan terhadap hutang luar negeri yang berkelanjutan dalam jangka pendek. Lebih lanjut, kointegrasi panel menjelaskan bahwa dalam jangka panjang indikator makroekonomi (kecuali nilai tukar) dan kelembagaan berdampak signifikan terhadap hutang luar negeri yang berkelanjutan. Hasil studi berkontribusi terhadap kebijakan pemerintah seperti kebijakan pengelolaan hutang luar negeri, pro-pertumbuhan, pro-investasi, stabilitas harga dan peningkatan kualitas kelembagaan baik pada tingkat sebuah negara dan tingkat ASEAN.

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Debt sustainability in emerging market countries: Some policy guidelines from a fan-chart approach

Cited by 24 publications

References 32 publications

Public debt and private consumption in Asia Pacific countries: Is there evidence for Ricardian equivalence?

Public debt and private consumption in Asia Pacific countries: Is there evidence for Ricardian equivalence?

On the dynamics of sovereign debt in China: Sustainability and structural change

External Debt Sustainability in Selected ASEAN Countries: Do Macroeconomic Data and Institutions Matter?

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