Government fiscal projection and debt sustainability

Sakuragawa, Masaya; Sakuragawa, Yukie

doi:10.1016/j.japwor.2020.101010

Cited by 6 publications

(7 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This implies that a temporary increase in cyclical government spending could worsen the tendency of improving primary surpluses in the event of shocks. These findings align with Aldama and Creel (2017b) and Sakuragawa and Sakuragawa (2020).…”

Section: Empirical Analysis and Interpretationsupporting

confidence: 83%

“…Also, the negative economic significance of the government cyclical spending in the unsustainable regime suggests that the fiscal response to spikes in public debt rather culminates the deterioration of the primary balance. This finding is concomitant to a priori expectation and Aldama and Creel (2017b) for the US and Sakuragawa and Sakuragawa (2020) for Japan. Next, the coefficient and significance of the real interest rate, in the unsustainable regime, do not indicate fiscal prudence and discipline in the response of fiscal authorities to changes in the real interest rate.…”

Section: Empirical Analysis and Interpretationsupporting

confidence: 75%

“…Furthermore, linear estimates of the equation (5) fiscal policy rule portend strong serial correlation in the residuals. Therefore, a Cochrane–Orcutt AR (1) procedure (Aldama and Creel, 2017b; Sakuragawa and Sakuragawa, 2020) is used to correct strong auto-correlation in the residuals, so that μt=(1−ρL)−1ut where ut∼ iidfalse(0,δ2 false). This procedure is also applied to the quadratic and cubic asymmetric models in equations (6) and (7) which accommodate increasing and decreasing responsiveness of primary fiscal balance to increase in debt.…”

Section: Methodology and Datamentioning

confidence: 99%

“…First, the linear fiscal policy rule is estimated while the quadratic, cubic and kinked model analytics are employed to capture asymmetries in terms of the increase and decrease reaction of primary fiscal balance to the rise in public debt. The possibility of a strong serial correlation in residuals is avoided by applying the Cochrane-Orcutt AR(1) procedures as argued in Aldama and Creel (2017b) and Sakuragawa and Sakuragawa (2020). This, however, ensures the robustness of the various models estimated.…”

Section: Empirical Analysis and Interpretationmentioning

confidence: 99%

See 3 more Smart Citations

Policy asymmetries and fiscal sustainability: evidence from Nigeria

Adeosun

Ayodele

Jongbo

2021

AJEMS

View full text Add to dashboard Cite

PurposeThis study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.Design/methodology/approachThis is methodologically achieved by estimating the baseline constant-parameter and Markov regime switching fiscal models. The asymmetric autoregressive distributed lag fiscal model is also employed to substantiate the differential responses of fiscal authorities to public debt.FindingsThe baseline constant-parameter fiscal model provides mixed results of sustainable and unsustainable fiscal policy. The inconclusiveness is adduced to instability in primary fiscal balance–public debt dynamics. This makes it necessary to capture regime switches in the fiscal policy rule. The Markov switching estimations show a protracted fiscal unsustainable regime that is inconsistent with the intertemporal budget constraint (IBC). The no-Ponzi game and debt stabilizing results of the Markov switching fiscal model further revealed that the transversality and debt stability conditions were not satisfied. Additional findings from the asymmetric autoregressive model estimation show that fiscal consolidation responses vary with contraction and expansion in output and spending, coupled with downturns and upturns in public debt dynamics in both the long and short run. These findings thus confirm the presence of asymmetries in the fiscal policy authorities' reactions to public debt. Further, additional evidences show the violation of the IBC which is exacerbated by the deleterious effect of the pro-cyclical fiscal policy response in boom on the improvement of the primary fiscal balance.Originality/valueThis study deviates from the extant literature by accommodating time variation, periodic switches and fiscal policy asymmetries in the fiscal sustainability analysis of Nigeria.

show abstract

Section: Empirical Analysis and Interpretationsupporting

confidence: 83%

Section: Empirical Analysis and Interpretationsupporting

confidence: 75%

Section: Methodology and Datamentioning

confidence: 99%

Section: Empirical Analysis and Interpretationmentioning

confidence: 99%

See 2 more Smart Citations

Policy asymmetries and fiscal sustainability: evidence from Nigeria

Adeosun

Ayodele

Jongbo

2021

AJEMS

View full text Add to dashboard Cite

show abstract

“…In the study on financial sustainability in Japan, Sakuragawa and Sakuragawa (2020) tested whether simulations conducted under the policy constraint imposed by the fiscal response function support the official forecast and debt sustainability. The researchers used a response function estimated from a panel data set for 23 OECD countries and as an adjunct to the estimate from Japanese data.…”

Section: Literature Reviewmentioning

confidence: 99%

Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

Mukhtarkhan

2021

IJOA

View full text Add to dashboard Cite

Purpose The purpose of this paper is to study debt sustainability of countries with a resource-based economy on the example of the Republic of Kazakhstan and the Russian Federation. Design/methodology/approach Macroeconomic indicators and data on external and internal public debt of the Republic of Kazakhstan and the Russian Federation for the period from 2007 to 2019 were analyzed using quantitative, qualitative, comparative, descriptive and graphical methods. Based on the collected data, the indicators were calculated, analyzed and compared, taking into account the threshold values, using The Debt Sustainability Framework for Low-Income Countries of the International Monetary Fund and the World Bank. Findings The results of the study showed that the indicators of the public debt of both the Republic of Kazakhstan and the Russian Federation, during the period covered by the study, were in the zone of reduced risk and were stable. In addition, the study revealed a slight shift in the structure of the public debt of the Republic of Kazakhstan toward a decrease in the share of domestic borrowing (from 67% to 55%), whereas in the structure of the Russian public debt, the share of domestic borrowing increased significantly (from 52% to 74%). Originality/value The results of this study can be applied by scientists to analyze the sustainability of public debt in various countries and regions, as well as by officials to determine the fiscal and budgetary policies of the Republic of Kazakhstan and the Russian Federation, as well as other states.

show abstract

The optimum quantity of debt for an aging Japan: welfare and demographic dynamics

Okamoto

2024

JER

View full text Add to dashboard Cite

Japan’s government is heavily indebted, and the current net debt tends to increase. This paper uses an extended life-cycle general equilibrium model with endogenous fertility to investigate an optimal size of government debt from two viewpoints: individual welfare and future demographic dynamics. A simulation analysis finds that the level of net government debt, which maximizes per-capita utility, is negative at − 220% of Japan’s gross domestic product (GDP). The results also indicate that the net debt-to-GDP ratio of − 220% produces a considerable per-capita welfare gain; however, compared to the baseline simulation with a debt-to-GDP ratio of 150%, it substantially decreases the total population in the long run.

show abstract

Government fiscal projection and debt sustainability

Cited by 6 publications

References 25 publications

Policy asymmetries and fiscal sustainability: evidence from Nigeria

Policy asymmetries and fiscal sustainability: evidence from Nigeria

Formation and management of public debt sustainability on the example of the Republic of Kazakhstan and the Russian Federation

The optimum quantity of debt for an aging Japan: welfare and demographic dynamics

Contact Info

Product

Resources

About