Fiscal Sustainability in Developing Asia
Developing Asia's public finances are generally healthy as a result of historical fiscal discipline. However, failure to withdraw the region’s anticrisis fiscal stimulus in a timely manner may jeopardize fiscal sustainability in the future.
The central objective of this paper is to empirically examine the issue of fiscal sustainability in developing Asia. To do so, we first diagnose the region's public finances by analyzing the evolution of key fiscal indicators over time and across subregions. We then estimate fiscal indicators over time and across subregions. We then estimate fiscal policy response functions that measure the adjustment of the primary fiscal balance to public debt positions. Overall, our results indicate that the region's public finances are in good shape as a result of responsible fiscal behavior. Nevertheless, failure to withdraw the region's anticrisis fiscal stimulus in a timely manner may jeopardize fiscal sustainability, bolstering the case for strong medium-term fiscal policy frameworks.
Contents
- Abstract
- Introduction
- Conceptual Review of Fiscal Sustainability
- Fiscal Diagnostics: Evolution of Key Fiscal Indicators across Asia over Time
- Econometric Tests of Primary Fiscal Balance Response Functions
- Fiscal Stimulus Scenarios
- Medium-Term Fiscal Policy Frameworks
- Concluding Observations
- Selected References
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