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Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries

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Description:This paper studies fiscal policy effects in developing countries with external debt and sovereign default risks. State-dependent distributions of fiscal limits are simulated based on macroeconomic uncertainty and fiscal policy specifications. The analysis shows that expected future revenue plays an important role in the low fiscal limits of developing countries, relative to those of developed countries. External debt carries additional risks since large devaluation of the real exchange rate can suddenly raise default probabilities. Consistent with majority views, fiscal consolidations are counterproductive in the short and medium runs. When an economy approaches its fiscal limits, government spending can be less expansionary than in a low-debt state. As more revenue is required to service debt in a high-debt state, higher tax rates raise the economic cost of increasing consumption, reducing the fiscal multiplier.We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries. To get started finding Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries, you are right to find our website which has a comprehensive collection of manuals listed.
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Pages: 37

Format: PDF, EPUB & Kindle Edition

Publisher: International Monetary Fund

Release: 2014

ISBN: 1475515227

Description: This paper studies fiscal policy effects in developing countries with external debt and sovereign default risks. State-dependent distributions of fiscal limits are simulated based on macroeconomic uncertainty and fiscal policy specifications. The analysis shows that expected future revenue plays an important role in the low fiscal limits of developing countries, relative to those of developed countries. External debt carries additional risks since large devaluation of the real exchange rate can suddenly raise default probabilities. Consistent with majority views, fiscal consolidations are counterproductive in the short and medium runs. When an economy approaches its fiscal limits, government spending can be less expansionary than in a low-debt state. As more revenue is required to service debt in a high-debt state, higher tax rates raise the economic cost of increasing consumption, reducing the fiscal multiplier.We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries. To get started finding Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries, you are right to find our website which has a comprehensive collection of manuals listed.
Our library is the biggest of these that have literally hundreds of thousands of different products represented.

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Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries

Fiscal Limits, External Debt, and Fiscal Policy in Developing Countries

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