Fiscal sustainability in Central and Latin American countries : evidence from a panel cointegration approach
Résumé
This empirical study aims at assessing sustainability of fiscal policies in twenty Central and Latin American countries
over the period 1990-2012. We employ the second generation panel unit root test proposed by Pesaran (2007) to take
into account for cross-section dependence and it is found that the fiscal variables are integrated of order one. Using the panel cointegration tests suggested by Westerlund (2007), econometric results show that there is a long-run
relationship between government revenue and spending. The estimate of the panel cointegrating regression in an error correction model indicates that the budget deficit turns out to be weakly sustainable.
Domaines
Economies et financesOrigine | Fichiers produits par l'(les) auteur(s) |
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