The impact of contingent liability realizations on public finances

Bova, Elva; Ruiz-Arranz, Marta; Toscani, Frederik; Ture, H. Elif

doi:10.1007/s10797-018-9496-1

Cited by 17 publications

(20 citation statements)

References 6 publications

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“…Consequently, the paper aims to fill the gap identified by international authorities through the inclusion the empirical analysis of both implicit and explicit contingent liabilities. To our knowledge, only one paper (Bova et al, 2019) followed a similar granular approach, by applying the logit model and targeting advanced and emerging countries.…”

Section: Introductionmentioning

confidence: 99%

“…Fourth, to alleviate a major drawback related to data availability, we developed a new, comprehensive database of more than 100 contingent liability realizations in European countries for the period 1990-2019. The database combines information taken from Bova et al (2019) dataset with novel data, collected manually from the IMF country-specific Staff Reports, and Eurostat data on government interventions to support financial institutions.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Growing fiscal risk in European Union resulting from government contingent liabilities in the pandemic crisis – assessment and policy recommendations

Anghel

Boitan

Marchewka-Bartkowiak

2021

Economic Research-Ekonomska Istraživanja

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The pandemic crisis, responsible for increased levels of financing with public debt and contingent liabilities, may trigger another debt crisis across the European Union. Our research indicates that member states are increasingly willing to use public guarantees and other off-budget instruments, which are classified as "hidden debt" or "hidden expenditure". Simulations have shown that if public guarantees have to be covered by the budget, an unprecedented increase in a public debt may occur across the euro area countries and the entire EU as a whole. Therefore, the authors recommend the introduction of uniform rules for estimating fiscal risk due to contingent liabilities, as well as standards for their reporting, allowing for their constant monitoring at the EU level.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Growing fiscal risk in European Union resulting from government contingent liabilities in the pandemic crisis – assessment and policy recommendations

Anghel

Boitan

Marchewka-Bartkowiak

2021

Economic Research-Ekonomska Istraživanja

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“…This could diminish the asset value of SOEs or affect dividend payment to the government. Governments may also have to realize contingent liabilities and step in and bail out SOEs that have been hit hard by a disaster (see Bova, Ruiz‐Arranz, Toscani, & Ture, 2019). There are also fiscal consequences related to adaptation and mitigation policies (e.g., Bachner, Bednar‐Friedl, & Knittel, 2019).…”

Section: Climate Change and Sovereign Riskmentioning

confidence: 99%

Bracing for the Typhoon: Climate change and sovereign risk in Southeast Asia

Beirne

Renzhi

Volz

2021

Sustainable Development

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This article investigates and empirically tests the link between climate change and sovereign risk in Southeast Asia. Southeast Asian countries are among those most heavily affected by climate change. The number and intensity of extreme weather events in the region have been increasing markedly, causing severe social and economic damage. Southeast Asian economies are also exposed to gradual effects of global warming as well as transition risks stemming from policies aimed at mitigating climate change. To empirically examine the effect of climate change on the sovereign risk of Southeast Asian countries, we employ indices for vulnerability and resilience to climate change and estimate country‐specific OLS models for six countries and a fixed effects panel using monthly data for the period 2002–2018. Both the country‐specific and the panel results show that greater climate vulnerability appears to have a sizable positive effect on sovereign bond yields, while greater resilience to climate change has an offsetting effect, albeit to a lesser extent. A higher cost of debt holds back much‐needed investment in public infrastructure and climate adaptation, increases the risk of debt sustainability problems, and diminishes the development prospects of Southeast Asian countries.

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“…This, in turn, has significantly improved the efficiency of public finance management. Bova et al (2019) conducted a similar study, but with regard to the formation of contingent liabilities, which were part of public debt and were especially active after the 2008 crisis. Using an analysis of developed and developing countries, they showed that countries with greater transparency and better oversight of the formation and use of public finances had significantly lower contingent liabilities, which typically ranged from 6% to 40% of GDP.…”

Section: Literature Reviewmentioning

confidence: 99%