Fiscal Sustainability in Developing Asia

48 Pages Posted: 15 Jul 2010 Last revised: 17 Nov 2010

See all articles by Charles Adams

Charles Adams

National University of Singapore (NUS)

Benno Ferrarini

Asian Development Bank

Donghyun Park

Asian Development Bank - Economic Research

Date Written: June 1, 2010

Abstract

The central objective of this paper is to empirically examine the issue of fiscal sustainability in developing Asia. To do so, we first diagnose the region’s public finances by analyzing the evolution of key fiscal indicators over time and across subregions. We then estimate fiscal policy response functions that measure the adjustment of the primary fiscal balance to public debt positions. Overall, our results indicate that the region’s public finances are in good shape as a result of responsible fiscal behavior. Nevertheless, failure to withdraw the region’s anticrisis fiscal stimulus in a timely manner may jeopardize fiscal sustainability, bolstering the case for strong medium-term fiscal policy frameworks.

Keywords: Fiscal sustainability, Asia, fiscal policy, fiscal balance, public debt

JEL Classification: E62, H62, h63

Suggested Citation

Adams, Charles and Ferrarini, Benno and Park, Donghyun, Fiscal Sustainability in Developing Asia (June 1, 2010). Asian Development Bank Economics Working Paper Series No. 205. Available at SSRN: https://ssrn.com/abstract=1640264 or http://dx.doi.org/10.2139/ssrn.1640264

Charles Adams (Contact Author)

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Benno Ferrarini

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Donghyun Park

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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