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Theoretical models on fiscal sustainability hypothesize that indebted governments can lower their current debt by generating future primary surpluses, ceteris paribus. While both developed and developing countries struggle with the issue of debt stabilization, the latter, in particular face heightened sensitivity from creditors, which provides them an impetus to respond more strongly to stabilize their debt. Based on a panel of 53 developing countries, we examine the fiscal response of these countries to changes in their debt‐to‐gross domestic product ratio. We find evidence of a positive relationship between the debt and primary surplus and that countries adjust along both the revenue and expenditure margins at roughly the same rate. (JEL E62, H50, O11)

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In this article, we assess whether the incidence of crime helps to explain the variation in sectoral FDI flows. Using a panel of 29 Organization of Economic Co-operation and Development (OECD) countries for the period 2003-2012, we employ a generalized method of moments (GMM) estimation strategy due to the potential for endogeneity between our variables of interest. Our results indicate that crime deters investment to the service sector. In particular, this effect is observed in the following service industry subsector: financial services. Policymakers interested in boosting FDI in the affected sectors should be concerned with policies that focus on the reduction of criminal activities.