Assessing Fiscal Sustainability for SAARC and IMT-GT Countries

Syed, Munawar-Shah and Mariani, Abdul-Majid and Syed, Hussain-Shah (2014): Assessing Fiscal Sustainability for SAARC and IMT-GT Countries. Published in: Romanian Journal of Fiscal Policy , Vol. 5, No. 2 (2014): pp. 26-40.

Abstract

This study examines the fiscal sustainability of SAARC and Asian Growth-Triangle countries using Fisher and IPS tests of panel unit root and Pedroni test of panel cointegration. The tests are applied to the relationships, in terms of GDP ratios, between, i) the debt and primary surplus, and ii) government expenditure and revenues. Both models show consistent results suggesting that fiscal policy for the low-income countries is sustainable whereas it may not be sustainable for the high-income countries. This also indicates that the fiscal policy can be sustainable (non-sustainable) even for the debt above (below) 60 percent of the GDP.

• Item Type: MPRA Paper
• Language: English
• Keywords: Debt, Fiscal Policy, Sustainability, Panel Unit Roots, Panel Cointegration
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt

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