A Cross-Country Database of Fiscal Space

48 Pages Posted: 4 Aug 2017

See all articles by M. Ayhan Kose

M. Ayhan Kose

World Bank; Brookings Institution; Centre for Economic Policy Research (CEPR); Australian National University (ANU)

Sergio Kurlat

World Bank

Franziska Ohnsorge

World Bank

Naotaka Sugawara

World Bank

Date Written: August 3, 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. We 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: Fiscal policy, sovereign debt, fiscal deficit, private debt, financial crises, oil prices.

JEL Classification: E62, H62, H63

Suggested Citation

Kose, M. Ayhan and Kurlat, Sergio and Ohnsorge, Franziska and Sugawara, Naotaka, A Cross-Country Database of Fiscal Space (August 3, 2017). CAMA Working Paper No. 48/2017, Available at SSRN: https://ssrn.com/abstract=3013451 or http://dx.doi.org/10.2139/ssrn.3013451

M. Ayhan Kose (Contact Author)

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Brookings Institution

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University (ANU)

Canberra, Australian Capital Territory 2601
Australia

Sergio Kurlat

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
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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