Do Governments in Developing Countries Pursue Sustainable Debt Policies? Empirical Evidence for Selected Countries in Africa and Latin America
In this paper we test for sustainability of public debt in selected low- and middle-income developing countries of Africa and Latin-America. We do this by analysing how the primary surplus to GDP reacts to variations in the debt to GDP ratio where we allow for a time-varying reaction
coefficient. Moreover, we test for stationarity of the overall budget deficit of the selected countries. The results show that, despite rising debt ratios, there is empirical evidence for some of the countries that public debt is sustainable, independent of whether they belong to the low-income
or middle-income group of countries.
Document Type: Research Article
Affiliations: Department of Business Administration and Economics, Bielefeld University, Bielefeld, Germany
Publication date: 01 April 2010
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