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Hela Ben Hassine Khalladi
''Fiscal fatigue, public debt limits and fiscal space in some MENA countries''
( 2019, Vol. 39 No.2 )
In the light of the evolution of public debt in some emerging countries during recent years, we have tried to assess debt limits, i.e the threshold from which debt starts to follow an explosive path, according to Ganiko, Melgarejo & Montoro (2016) model. This model was largely inspired from Gosh, Kim Mendoza, Ostry et Qureshi (2013). We have assessed the determinants of the public debt dynamics, the government primary balance as well as the effective cost of debt for 27 emerging countries during the 2000- 2017 period. Results show the existence of a fiscal fatigue, namely the loss of control of the debt accumulation using fiscal adjustments when debt increases. The debt ratio is an important determinant of the effective cost of public debt, since the level of debt increases EMBI Global spreads. Finally, debt limits range between 160 and 220% of GDP for our sample giving evidence of positive fiscal spaces for the four MENA countries used in this paper.
Keywords: Public debt sustainability, fiscal fatigue, fiscal space, fiscal reaction function, MENA
JEL: F3 - International Finance: General
E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
Manuscript Received : Feb 25 2019 Manuscript Accepted : May 02 2019

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