Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model
Purpose The purpose of this paper is to investigate the problem of fiscal sustainability for a panel of developing Asian economies. Design/methodology/approach In this study, cross-section dependence and heterogeneity are controlled...
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University of Economics Ho Chi Minh City
2023
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| Truy cập trực tuyến: | https://www.emerald.com/insight/content/doi/10.1108/JABES-01-2019-0001/full/html https://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115420 |
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oai:scholar.dlu.edu.vn:DLU123456789-1154202023-03-08T03:56:04Z Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model Bui, Duy-Tung Purpose The purpose of this paper is to investigate the problem of fiscal sustainability for a panel of developing Asian economies. Design/methodology/approach In this study, cross-section dependence and heterogeneity are controlled while estimating the fiscal reaction function, which shows how governments react to the accumulation of public debt. The study employs the common correlated effects mean group estimator in Pesaran (2006) for a panel of 22 developing Asian economies for the period 1999‒2017. Findings It is found that the fiscal sustainability issue in the region is not so benign as in previous studies. Overall, fiscal policy is unsustainable, even for the nonlinear fiscal rule. Country-specific long-run coefficients are also examined in the study. Research limitations/implications The findings show that many developing economies in the region could not satisfy the intertemporal budget constraint, which raises concerns about debt sustainability in the area, especially for the post-crisis period. Originality/value This study investigates whether governments can maintain the sustainability of public finances in the long-run, if the ratios of public debt over GDP and primary deficit over GDP continue their recent problematic trends. Another novelty is controlling for heterogeneous effects among the countries in the region to give a more precise picture of debt sustainability. The empirical evidence also supports that insolvency risk can occur at low levels of public debt. 2023-03-08T03:56:04Z 2023-03-08T03:56:04Z 2019 Article 2515-964X https://www.emerald.com/insight/content/doi/10.1108/JABES-01-2019-0001/full/html https://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115420 10.1108/JABES-01-2019-0001 en Journal of Asian Business and Economic Studies, Volume 27, Issue 1; p. 66-80 application/pdf University of Economics Ho Chi Minh City |
| institution |
Thư viện Trường Đại học Đà Lạt |
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Thư viện số |
| language |
English |
| description |
Purpose The purpose of this paper is to investigate the problem of fiscal sustainability for a panel of developing Asian economies. Design/methodology/approach In this study, cross-section dependence and heterogeneity are controlled while estimating the fiscal reaction function, which shows how governments react to the accumulation of public debt. The study employs the common correlated effects mean group estimator in Pesaran (2006) for a panel of 22 developing Asian economies for the period 1999‒2017. Findings It is found that the fiscal sustainability issue in the region is not so benign as in previous studies. Overall, fiscal policy is unsustainable, even for the nonlinear fiscal rule. Country-specific long-run coefficients are also examined in the study. Research limitations/implications The findings show that many developing economies in the region could not satisfy the intertemporal budget constraint, which raises concerns about debt sustainability in the area, especially for the post-crisis period. Originality/value This study investigates whether governments can maintain the sustainability of public finances in the long-run, if the ratios of public debt over GDP and primary deficit over GDP continue their recent problematic trends. Another novelty is controlling for heterogeneous effects among the countries in the region to give a more precise picture of debt sustainability. The empirical evidence also supports that insolvency risk can occur at low levels of public debt. |
| format |
Article |
| author |
Bui, Duy-Tung |
| spellingShingle |
Bui, Duy-Tung Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| author_facet |
Bui, Duy-Tung |
| author_sort |
Bui, Duy-Tung |
| title |
Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| title_short |
Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| title_full |
Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| title_fullStr |
Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| title_full_unstemmed |
Fiscal sustainability in developing Asia – new evidence from panel correlated common effect model |
| title_sort |
fiscal sustainability in developing asia – new evidence from panel correlated common effect model |
| publisher |
University of Economics Ho Chi Minh City |
| publishDate |
2023 |
| url |
https://www.emerald.com/insight/content/doi/10.1108/JABES-01-2019-0001/full/html https://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/115420 |
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1819846716223913984 |