Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/290051 
Year of Publication: 
2022
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1344
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
This paper studies the effect of fiscal rules on debt affordability in a large set of developed and emerging market economies, using a panel data model which allows the inclusion of weakly exogenous regressors, and which deals appropriately with cross-sectional dependence. The results show a positive and significant effect of fiscal rule implementation on public debt affordability which is robust to various model specifications. The effect is stronger for emerging market economies which benefit from the implementation of any fiscal rule. In contrast, developed countries benefit only from high-quality fiscal rules. The findings have important policy implications for fiscal management, especially in emerging market economies.
Subjects: 
cross-sectional dependence
debt affordability
emergingmarket economies
fiscal rules
weakly exogenous regressors
JEL: 
C33
F34
G15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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