Debt sustainability and financial crises in South Africa
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Date
Authors
Naraidoo, Ruthira
Raputsoane, Leroi
Journal Title
Journal ISSN
Volume Title
Publisher
Routledge
Abstract
In this study, we use a long historical data series to assess debt sustainability in South Africa
allowing for possible nonlinearities in the form of threshold behavior by fiscal authorities
conditional on the recent history of indebtedness and the occurrence of financial crises. First,
the results reveal that fiscal consolidation is maintained when a debt-to-GDP ratio of around
56 percent is reached with evidence of a statistically insignificant fiscal consolidation below
this threshold level. Second, the results reveal that fiscal adjustment takes into account past
levels of debt to allow for smoother corrective action. Third, fiscal consolidation occurs at a
higher debt-to-GDP ratio during financial crises.
Description
Keywords
Financial crisis, Sovereign debt, Thresholds, Debt-to-GDP ratio, Gross domestic product (GDP)
Sustainable Development Goals
Citation
Ruthira Naraidoo & Leroi Raputsoane (2015) Debt Sustainability and Financial Crises in South Africa, Emerging Markets Finance and Trade, 51:1, 224-233, DOI:10.1080/1540496X.2015.1011534.