Fiscal sustainability of Latin American Countries under cross-dependency and structural breaks

Resumo

This work investigates the hypothesis of fiscal sustainability for 18 Latin American countries from 1991 to 2022. We applied a panel cointegration methodology to evaluate the existence of a long-term relationship between government revenue and expenditures, incorporating cross-sectional dependence and endogenously estimated structural breaks. Since Latin American economies are heterogeneous, a unified analysis was not effective. Therefore, we grouped countries according to economic, financial, and geographic features, which made it possible to handle distinct fiscal patterns among them and identify a sustainable group of 6 countries. We also provided empirical evidence for the role played by cross-dependence terms, carefully selected control variables, and the proper estimation and modelling of the breakpoints. The impacts of COVID-19 have proven to be crucial in making some countries unsustainable.

Ficha do documento

Tipo

Artigo científico

Ano

2024

Instituição

Economia LACEA Journal

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Acesso aberto

Identificador

oai:repositorio.fgv.br:10438/36078

Temas

EconomiaFinanças PúblicasMeio Ambiente

Palavras-chave

Sustentabilidade fiscalPanel modelLatin American countriesStructural breaksFiscal sustainabilityEconomiaAmérica LatinaCOVID-19 (Doença)Sustentabilidade