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FINANCIAL CONDITIONS AND FISCAL PERFORMANCE IN EMERGING MARKETS
Author(s) -
HAUNER DAVID,
KUMAR MANMOHAN S.
Publication year - 2009
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2008.00119.x
Subject(s) - emerging markets , economics , financial market , capital market , capital flows , financial integration , globalization , monetary economics , capital (architecture) , financial globalization , financial system , finance , business , market economy , liberalization , archaeology , history
Various effects of rising integration of emerging markets into the global capital markets have been studied, yet not its potentially significant fiscal implications. This article argues that larger external financing implies a rising pass‐through from external financial conditions to public finances. It contributes to the literature on financial globalization as well as to the one on measuring fiscal performance. It suggests a framework for analyzing the effects of external financial conditions on fiscal performance and applies it in two case studies to 40 emerging markets. The results suggest that ignoring financial conditions can entail misleading assessments of underlying fiscal performance. ( JEL F3, H5, H6)