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A Modern History of Fiscal Prudence and Profligacy

Author/Editor: Paolo Mauro | Rafael Romeu | Ariel J Binder | Asad Zaman
Authorized for Distribution: January 9, 2013
Electronic Access: Free Full Text (PDF file size is 914KB)
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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.

Summary: We draw on a newly collected historical dataset of fiscal variables for a large panel of countries—to our knowledge, the most comprehensive database currently available—to gauge the degree of fiscal prudence or profligacy for each country over the past several decades. Specifically, our dataset consists of fiscal revenues, primary expenditures, the interest bill (and thus both the primary and the overall fiscal deficit), the government debt, and gross domestic product, for 55 countries for up to two hundred years. For the first time, a large cross country historical data set covers both fiscal stocks and flows. Using Bohn’s (1998) approach and other tests for fiscal sustainability, we document how the degree of prudence or profligacy varies significantly over time within individual countries. We find that such variation is driven in part by unexpected changes in potential economic growth and sovereign borrowing costs.
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Series: Working Paper No. 13/5
Subject(s): Fiscal policy | Fiscal sustainability | Cross country analysis
Notes: View Electronic Chartbook for this title Public Finances in Modern History Database
    Published:   January 9, 2013        
    ISBN/ISSN:   9781616357825/1018-5941   Format:   Paper
    Stock No:   WPIEA2013005   Pages:   53
    Price:   US$18.00
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