A Modern History of Fiscal Prudence and Profligacy

IMF Working Papers, January 9, 2013

Source details

Newly collected historical dataset of fiscal variables for a large panel of countries, described as “to our knowledge, the most comprehensive database currently available.”
Coverage:
- 55 countries
- Up to two hundred years
Variables included:
- fiscal revenues
- primary expenditures
- the interest bill (and thus both the primary and the overall fiscal deficit)
- the government debt
- gross domestic product
For the first time, a large cross-country historical data set covers both fiscal stocks and flows.
Supplemental resources:
- Link to data for this title
- ZIP
- Public Finances in Modern History Database
- Electronic Chartbook for this title

Primary econometric approach: Bohn’s (1998) approach.
Additional tests: other tests for fiscal sustainability (not enumerated on the page).
Analytic focus: gauge the degree of fiscal prudence or profligacy for each country over the past several decades and document variation over time within individual countries.

The degree of prudence or profligacy varies significantly over time within individual countries.
Part of this variation is driven by:
- unexpected changes in potential economic growth
- sovereign borrowing costs

Subject: Expenditure, Financial services, Fiscal policy, Fiscal stance, Public debt, Real interest rates
Keywords: Africa, budget deficits, debt coefficient, debt ratio, debt sustainability, economic growth, financial crisis, Fiscal policy, fiscal policy response, Fiscal stance, Global, interaction term, interest rate, public debt, real GDP, Real interest rates, response coefficient, WP