Foreign debt, global liquidity, and fiscal sustainability

Danbee Park, Taeyoon Sung

Research output: Contribution to journalArticle

Abstract

We empirically investigate fiscal sustainability by comparing countries in the different economic groups with a dataset covering 180 countries during the period from 1980 to 2015. As the OECD countries have higher international debt ratio than other countries, they have higher probability to be exposed to global risk factors. Non-OECD countries turn out to be more fiscally solvent than OECD countries due to their limited access to international financial market. However, we also find that better access to international liquidity increases fiscal sustainability within the sample of OECD countries, while it does not improve the fiscal solvency in case of non-OECD countries.

Original languageEnglish
Article number101008
JournalJapan and the World Economy
Volume54
DOIs
Publication statusPublished - 2020 Jun

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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