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Author/Editor:
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Tanner, Evan ; Samaké, Issouf
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Publication Date:
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December 01, 2006
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Electronic Access:
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Free Full text
(PDF file size is 616KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper examines the sustainability of fiscal policy under uncertainty in three emerging market countries, Brazil, Mexico, and Turkey. For each country, we estimate a vector autoregression (VAR) that includes fiscal and macroeconomic variables. Retrospectively, a historical decomposition shows by how much debt accumulation reflects unsustainable policy, adverse shocks, or both. Prospectively, Monte Carlo techniques reveal the primary surplus that is required to keep the debt/GDP ratio from rising in all but the worst 50 percent, 25 percent, and 10 percent of circumstances. Such a value-at-risk approach presents a clearer menu of policy options than currently used frameworks.
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Order a print copy
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Series:
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Working Paper No. 06/295
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Subject(s):
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Fiscal policy | Brazil | Mexico | Turkey | Emerging markets | Public debt | Economic models
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Author's Keyword(s):
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Tax smoothing | sustainability | vector autoregression | historical decomposition | primary surplus |
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English
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Publication Date:
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December 01, 2006
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ISBN/ISSN:
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1934-7073
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Format:
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Paper
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Stock No:
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WPIEA2006295
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Pages:
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42
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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