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Do Governments in Developing Countries Pursue Sustainable Debt Policies? Empirical Evidence for Selected Countries in Africa and Latin America

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  • Bettina Fincke
  • Alfred Greiner

Abstract

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.

Suggested Citation

  • Bettina Fincke & Alfred Greiner, 2010. "Do Governments in Developing Countries Pursue Sustainable Debt Policies? Empirical Evidence for Selected Countries in Africa and Latin America," Journal of Development Studies, Taylor & Francis Journals, vol. 46(4), pages 745-770.
    • Handle: RePEc:taf:jdevst:v:46:y:2010:i:4:p:745-770
    DOI: 10.1080/00220380903012698
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    Cited by:

    1. Thanh Dat Nguyen & Sandy Suardi & Chew Lian Chua, 2017. "The Behavior Of U.S. Public Debt And Deficits During The Global Financial Crisis," Contemporary Economic Policy, Western Economic Association International, vol. 35(1), pages 201-215, January.
    2. Samia Omrane Belguith & Foued Badr Gabsi, 2019. "Public Debt Sustainability in Tunisia: Empirical Evidence Estimating Time-Varying Parameters," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 550-560, June.
    3. Rudi Kurniawan, 2015. "Does Indonesia Pursue Sustainable Fiscal Policy?," Working Papers in Economics and Development Studies (WoPEDS) 201504, Department of Economics, Padjadjaran University, revised Nov 2015.

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