Measuring Fiscal Vulnerability and Fiscal Stress: A Proposed Set of Indicators
April 1, 2011
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Summary
This paper proposes a set of fiscal indicators to assess rollover risks using the conceptual framework developed by Cottarelli (2011). These indicators provide early warning signals about the manifestation of these risks, giving policymakers the opportunity to adjust policies before extreme fiscal stress events. Two aggregate indices are calculated: an index of fiscal vulnerability and an index of fiscal stress. Results show that both indices are elevated for advanced economies, reflecting unfavorable medium-term debt dynamics and aging-related spending pressures. In emerging economies, solvency risks are lower, but the composition of public debt remains a source of risk and the fiscal position is weaker than before the crisis.
Subject: Asset and liability management, Debt refinancing, Fiscal risks, Fiscal stance, Public debt
Keywords: debt, government debt, short-term debt, WP
Pages:
20
Volume:
2011
DOI:
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Issue:
094
Series:
Working Paper No. 2011/094
Stock No:
WPIEA2011094
ISBN:
9781455253333
ISSN:
1018-5941
