Contents -- I. INTRODUCTION -- II. ANALYTICAL MODEL -- III. DATA AND ESTIMATION METHODS -- IV. EMPIRICAL FINDINGS -- V. THE "MYSTERY" OF HIGH INTEREST RATES IN BRAZIL -- VI. CONCLUSIONS -- APPENDIX: DATA SOURCES AND PROCEDURES -- REFERENCES

"This paper looks at fiscal solvency and public debt sustainability in both emerging market and advanced countries. Evidence of fiscal solvency, in the form of a robust positive conditional relationship between public debt and the primary fiscal balance, is established in both groups of...