Financial Conditions and Fiscal Performance in Emerging Markets

11 Pages Posted: 26 Jan 2009

See all articles by David Hauner

David Hauner

International Monetary Fund (IMF) - African Department

Manmohan Kumar

International Monetary Fund (IMF) - Research Department

Abstract

Various effects of rising integration of emerging markets into the global capital markets have been studied, yet not its potentially significant fiscal implications. This article argues that larger external financing implies a rising pass-through from external financial conditions to public finances. It contributes to the literature on financial globalization as well as to the one on measuring fiscal performance. It suggests a framework for analyzing the effects of external financial conditions on fiscal performance and applies it in two case studies to 40 emerging markets. The results suggest that ignoring financial conditions can entail misleading assessments of underlying fiscal performance.

JEL Classification: F3, H5, H6

Suggested Citation

Hauner, David and Kumar, Manmohan, Financial Conditions and Fiscal Performance in Emerging Markets. Contemporary Economic Policy, Vol. 27, Issue 1, pp. 86-96, January 2009. Available at SSRN: https://ssrn.com/abstract=1331653 or http://dx.doi.org/10.1111/j.1465-7287.2008.00119.x

David Hauner (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Manmohan Kumar

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7771 (Phone)
202-589-7771 (Fax)

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