Riding the Storm: Fiscal Sustainability in the Caribbean

Released on by Mr.Serhan Cevik
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  • Riding the Storm: Fiscal Sustainability in the Caribbean Book Detail

  • Author : Mr.Serhan Cevik
  • Release Date : 2020-01-31
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 19
  • ISBN 13 : 1513526367
  • File Size : 15,15 MB
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Riding the Storm: Fiscal Sustainability in the Caribbean by Mr.Serhan Cevik PDF Summary

Book Description: Fiscal sustainability remains a paramount challenge for small economies with high debt and greater vulnerability to climate change. This paper applies the model-based sustainability test for fiscal policy in a panel of 16 Caribbean countries during the period 1980–2018. The results indicate that the coefficient on lagged government debt is positive and statistically significant, implying that fiscal policy in the Caribbean takes corrective actions to counteract an increase in the debt-to-GDP ratio. Nonlinear estimations, however, show that the quadratic debt parameter is negative, which indicates that fiscal policy response is not adequate to ensure sustainability at higher levels of debt. We also find that the fiscal stance tends to be countercyclical on average during the sample period. These empirical results confirm that maintaining prudent fiscal policies and implementing growth-enhancing structural reforms are necessary to build fiscal buffers and ensure debt sustainability with high probability even when negative shocks occur over the long term.

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Caribbean Renewal

Caribbean Renewal

File Size : 94,94 MB
Total View : 9470 Views
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Caribbean economies face high and rising debt-to-GDP ratios that jeopardize prospects for medium-term debt sustainability and growth. This book provides a compr