A Cross-Country Database of Fiscal Space

48 Pages Posted: 3 Aug 2017 Last revised: 10 Nov 2017

See all articles by M. Ayhan Kose

M. Ayhan Kose

Development Prospects Group at the World Bank

Sergio Andres Kurlat

World Bank - Development Prospects Group

Franziska Ohnsorge

World Bank

Naotaka Sugawara

World Bank

Date Written: August 2, 2017

Abstract

This paper presents a comprehensive cross-country database of fiscal space, broadly defined as the availability of budgetary resources for a government to service its financial obligations. The database covers up to 200 countries over the period 1990-2016, and includes 28 indicators of fiscal space grouped into four categories: debt sustainability, balance sheet vulnerability, external and private sector debt related risks as potential causes of contingent liabilities, and market access. The authors illustrate potential applications of the database by analyzing developments in fiscal space across three time frames: over the past quarter century; during financial crises; and during oil price plunges. The main results are as follows. First, fiscal space had improved in many countries before the global financial crisis. In advanced economies, following severe deteriorations during the crisis, many indicators of fiscal space have virtually returned to levels in the mid-2000s. In contrast, fiscal space has shrunk in many emerging market and developing economies since the crisis. Second, financial crises tend to coincide with deterioration in multiple indicators of fiscal space, but they are often followed by reduced reliance on short-term borrowing. Finally, fiscal space narrows in energy-exporting emerging market and developing economies during oil price plunges but later expands, often because of procyclical fiscal tightening and, in some episodes, a recovery in oil prices.

Keywords: Public Finance Decentralization and Poverty Reduction, Macro-Fiscal Policy, Economic Insecurity, Financial Crisis Management & Restructuring, Public Sector Economics, Debt Markets, Economic Adjustment and Lending, External Debt

Suggested Citation

Kose, M. Ayhan and Kurlat, Sergio Andres and Ohnsorge, Franziska and Sugawara, Naotaka, A Cross-Country Database of Fiscal Space (August 2, 2017). World Bank Policy Research Working Paper No. 8157. Available at SSRN: https://ssrn.com/abstract=3012905

M. Ayhan Kose (Contact Author)

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Sergio Andres Kurlat

World Bank - Development Prospects Group

United States

Franziska Ohnsorge

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Naotaka Sugawara

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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