{
  "title": "Riding the Storm: Fiscal Sustainability in the Caribbean",
  "publication": "IMF Working Papers, January 31, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/01/31/riding-the-storm-fiscal-sustainability-in-the-caribbean-48950",
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  "summary": "Fiscal sustainability remains a paramount challenge for small economies with high debt and greater vulnerability to climate change. This paper applies the model-based sustainability test for fiscal policy in a panel of 16 Caribbean countries during the period 1980–2018.",
  "sections": [
    {
      "heading": "Empirical framework and scope",
      "content": "- Panel: 16 Caribbean countries.\n- Sample period: 1980–2018.\n- Method: Model-based sustainability test for fiscal policy; nonlinear estimations also employed."
    },
    {
      "heading": "Key empirical findings",
      "content": "- The coefficient on lagged government debt is positive and statistically significant, implying that fiscal policy in the Caribbean takes corrective actions to counteract an increase in the debt-to-GDP ratio.\n- The quadratic debt parameter is negative in nonlinear estimations, indicating that fiscal policy response is not adequate to ensure sustainability at higher levels of debt.\n- The fiscal stance tends to be countercyclical on average during the sample period."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Maintaining prudent fiscal policies is necessary to build fiscal buffers.\n- Implementing growth-enhancing structural reforms is necessary to build fiscal buffers.\n- Prudent fiscal policy combined with growth-enhancing structural reforms is necessary to ensure debt sustainability with high probability even when negative shocks occur over the long term."
    },
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      "content": "- Authors: Serhan Cevik, Vibha Nanda\n- Date: January 31, 2020\n- Series: Working Paper No. 2020/021\n- Pages: 19\n- DOI: https://doi.org/10.5089/9781513526362.001\n\nRiding the Storm: Fiscal Sustainability in the Caribbean — Serhan Cevik and Vibha Nanda, January 31, 2020. IMF Working Paper No. 2020/021. DOI: https://doi.org/10.5089/9781513526362.001\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/01/31/riding-the-storm-fiscal-sustainability-in-the-caribbean-48950"
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    "Authors: Serhan Cevik, Vibha Nanda",
    "Published: January 31, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513526362.001",
    "Panel: 16 Caribbean countries.",
    "Sample period: 1980–2018.",
    "Method: Model-based sustainability test for fiscal policy; nonlinear estimations also employed.",
    "The coefficient on lagged government debt is positive and statistically significant, implying that fiscal policy in the Caribbean takes corrective actions to counteract an increase in the debt-to-GDP ratio.",
    "The quadratic debt parameter is negative in nonlinear estimations, indicating that fiscal policy response is not adequate to ensure sustainability at higher levels of debt.",
    "The fiscal stance tends to be countercyclical on average during the sample period.",
    "Maintaining prudent fiscal policies is necessary to build fiscal buffers.",
    "Implementing growth-enhancing structural reforms is necessary to build fiscal buffers.",
    "Prudent fiscal policy combined with growth-enhancing structural reforms is necessary to ensure debt sustainability with high probability even when negative shocks occur over the long term.",
    "Authors: Serhan Cevik, Vibha Nanda",
    "Date: January 31, 2020",
    "Series: Working Paper No. 2020/021",
    "Pages: 19",
    "DOI: https://doi.org/10.5089/9781513526362.001",
    "**Working Paper**"
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