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Title:A nonlinear approach to public finance sustainability in Latin America PDF Logo
Authors:Chortareas, Georgios
Kapetanios, George
Uctum, Merih
Issue Date:2003
Series/Report no.:Working Paper, Department of Economics, Queen Mary, University of London 486
Abstract:The debt crisis in Latin America is associated with the large fiscal imbalances of the 1980s; therefore public finance sustainability occupies the center of stabilization efforts in these economies. The literature examining this question in emerging economies is surprisingly scant and this paper aims at filling this gap. We analyze sustainability for a sample of Latin American countries, employing unit root tests that incorporate nonlinear alternative hypotheses. These tests capture the thresholds or corridor regimes that international agreements or markets impose on emerging economies' public finances. We show that support for sustainability substantially improves when such nonlinearities are taken into account.
JEL:H6
H87
Document Type:Working Paper
Appears in Collections:Working Paper Series, School of Economics and Finance, Queen Mary, University of London

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