A Cross-Country Database of Fiscal Space

Abstract

This paper presents a comprehensive crosscountry database of …scal space, broadly de…ned as the availability of budgetary resources for a government to service its …nancial obligations. The database covers up to 200 countries over the period 1990-2016, and includes 28 indicators of …scal space grouped into four categories: debt sustainability, balance sheet vulnerability, external and private sector debt related risks as potential causes of contingent liabilities, and market access. We illustrate potential applications of the database by analyzing developments in …scal space across three time frames: over the past quarter century; during …nancial crises; and during oil price plunges. The main results are as follows. First, …scal space had improved in many countries before the global …nancial crisis. In advanced economies, following severe deteriorations during the crisis, many indicators of …scal space have virtually returned to levels in the mid-2000s. In contrast, …scal space has shrunk in many emerging market and developing economies since the crisis. Second, …nancial crises tend to coincide with deterioration in multiple indicators of …scal space, but they are often followed by reduced reliance on short-term borrowing. Finally, …scal space narrows in energy-exporting emerging market and developing economies during oil price plunges but later expands, often because of procyclical …scal tightening and, in some episodes, a recovery in oil prices.

Phillips Lecture – Why Some Times Are Different: Macroeconomic Policy and the Aftermath of Financial Crises

“…But they do not ask how the behaviour of debt varies with the country's prior fiscal space or how the aftermath of crises varies with the fiscal response. Similarly, in recent work, Kose et al (2017) present multiple measures of fiscal space and discuss how space behaves around financial crises, but they do not examine the link between policy space and the aftermath of crises that is the focus of this paper. 1 On the fiscal policy side, the issues of how the level of government debt affects both the conduct of policy and fiscal multipliers are potentially relevant to how the aftermath of financial crises varies with government debt.…”

“…Similarly, in recent work, Kose et al . () present multiple measures of fiscal space and discuss how space behaves around financial crises, but they do not examine the link between policy space and the aftermath of crises that is the focus of this paper…”

Asset Prices and Macroeconomic Outcomes: A Survey

“…The shortage (or outright lack) of data on important financial and macroeconomic variables has been a severe limitation. For example, comprehensive cross-country databases on public debt, fiscal space, and business and financial cycles are only of recent construction (see Kose et al (2017a) for a discussion of the literature on fiscal space). Although the prices of equities, bonds and other tradable assets are widely available, obtaining higher frequency and more comparable series on house prices and measures of credit remains a challenge.…”

Welfare State and Modern Processes of Fiscal Space Transformation

“…За прогнозами, "другий фіскальний шок" триватиме до 2020 р., що зумовить зменшення державних витрат на соціальний захист та соціальне забезпечення як у розвинених країнах, так і у країнах, що розвиваються. Окреслені тенденції стали причиною повернення в науково-практичний дискурс проблеми формування фіскального простору для вирішення визначених соціально-економічних завдань, що представлено в роботах таких міжнародних організацій, як МВФ [4], Світовий банк [11], ОЕСР [6], МОП [12], ВООЗ [5] та ін.…”