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Fiscal sustainability: a note for Cabo Verde

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  • Mendes, Cassandro

Abstract

The present note aims to analyze the sustainability of the fiscal policies adopted by the government of Cabo Verde in the last two decades (1990-2013). We used time series techniques to derive our results. We tested the debt sustainability under two case scenarios by using the potential cointegration between the government expenditures and revenues (revenue with or without donations from international partners). The results from our data show that the fiscal policies adopted recently can be assumed to be sustainable only in the first scenario, when foreign donations are considered. If we exclude foreign donations from the government revenues, the hypothesis of non-sustainability cannot be rejected. These results show that fiscal reforms are needed to supplant the great dependence from Donors.

Suggested Citation

  • Mendes, Cassandro, 2015. "Fiscal sustainability: a note for Cabo Verde," MPRA Paper 65552, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65552
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    References listed on IDEAS

    as
    1. Hamilton, James D & Flavin, Marjorie A, 1986. "On the Limitations of Government Borrowing: A Framework for EmpiricalTesting," American Economic Review, American Economic Association, vol. 76(4), pages 808-819, September.
    2. Cashin, P. & Olekalns, N., 2000. "An Examination of the Sustainability of Indian Fiscal Policy," Department of Economics - Working Papers Series 748, The University of Melbourne.
    3. Hakkio, Craig S & Rush, Mark, 1991. "Is the Budget Deficit "Too Large?"," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 429-445, July.
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    More about this item

    Keywords

    Fiscal sustainability; intertemporal budget constraints; cointegration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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