Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62876
Year of Publication: 
2003
Series/Report no.: 
Working Paper No. 486
Publisher: 
Queen Mary University of London, Department of Economics, London
Abstract: 
The debt crisis in Latin America is associated with the large fiscal imbalances of the 1980s; therefore public finance sustainability occupies the center of stabilization efforts in these economies. The literature examining this question in emerging economies is surprisingly scant and this paper aims at filling this gap. We analyze sustainability for a sample of Latin American countries, employing unit root tests that incorporate nonlinear alternative hypotheses. These tests capture the thresholds or corridor regimes that international agreements or markets impose on emerging economies' public finances. We show that support for sustainability substantially improves when such nonlinearities are taken into account.
JEL: 
H6
H87
Document Type: 
Working Paper

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