Fiscal risk and its drivers: An empirical analysis

Arbeitspapier

This paper describes and quantifies fiscal risk in advanced and developing economies. Forecast errors in GDP growth explain nearly half of fiscal risk in advanced economies. However, errors in growth forecasts are less important in explaining fiscal risk in low- and middle-income countries. Most of the forecast errors in the debt-to-GDP ratio cannot be explained with standard debt-dynamics variables and needs to be attributed to the "the unexplained part of debt". Fiscal risk is high in bad-times, even when they are fully anticipated. In developing and emerging market economies this result is linked to negative balance sheet effects associated with foreign currency debt. The main drivers of fiscal risk in ADB borrowing countries are exchange rate volatility, commodity prices and small economic size.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Graduate Institute of International and Development Studies Working Paper ; No. HEIDWP17-2020

Classification and Topics

• Classification: Wirtschaft ; National Budget; Budget Systems ; National Deficit; Surplus ; National Debt; Debt Management; Sovereign Debt ; Forecasts of Budgets, Deficits, and Debt ; Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
• Subject: Fiscal policy ; Public debt ; Fiscal sustainability

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Panizza, Ugo
• Event: Veröffentlichung
• (who): Graduate Institute of International and Development Studies
• (where): Geneva
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/238090
• Last update: 20.09.2024, 8:21 AM CEST