This paper evaluates the bias of the least-squares-with-dummy-variables (LSDV) method in fiscal reaction function estimations. A growing number of studies estimate fiscal policy reaction functions-that is, relationships between the primary fiscal balance and its determinants, including public...

Intro -- Contents -- I. INTRODUCTION -- II. DEBT SUSTAINABILITY ANALYSIS AND RISK -- III. DEBT DYNAMICS AND THE CONDUCT OF FISCAL POLICY -- IV. RISKS TO DEBT SUSTAINABILITY IN FIVE EMERGING MARKET ECONOMIES -- V. CONCLUSION -- Appendix -- REFERENCES.

This paper proposes a probabilistic approach to public debt sustainability analysis (DSA) using "fan charts." These depict the magnitude of risks-upside and downside-surrounding public debt projections as a result of uncertain economic conditions and policies. We propose a simulation algorithm...

Using data on syndicated loan issuances by emerging market firms, we find that an increase in the external debt of emerging market governments significantly raises the borrowing costs of the domestic corporate sector. This finding suggests that a higher level of public external debt "crowds out"...

We show that fiscal policies reflecting a primary balance response to higher debt in line with historic experience would significantly increase the likelihood of reaching the debt targets of the U.S. administration in the medium term. Deficits and debt are higher under current budgetary...