Sustainability of Latin American Fiscal Deficits: A Panel Data Approach


  • Borradores de Economía


  • This paper evaluates the fiscal sustainability hypothesis for eight Latin Americancountries for the period 1960 - 2009: Argentina, Chile, Colombia, Ecuador, Panama, Peru, Paraguayand Uruguay. Using second generation cointegration panel data models, we test whether governmentrevenues and primary expenditures are sustainable in the long run. This methodology allowsfor cross-sectional dependence among countries and is appropriate under the existence of potentialstructural breaks. We found empirical evidence of sustainability of the primary deficit for theseLatin American countries but only in a weak sense.

fecha de publicación

  • 2011

Líneas de investigación

  • Fiscal Sustainability
  • Panel Cointegration Tests
  • Panel Unit Root Tests
  • Structural Change


  • 9106