Budina, N. and van Wijnbergen, S. (2009). Quantitative approaches to fiscal sustainability analysis: a case study of Turkey since the 2001 crisis World Bank Economic Review, 23(1):119--140.
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Affiliated author
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Publication year2009
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JournalWorld Bank Economic Review
This case study of fiscal sustainability in Turkey after the crisis in 2001 reviews andextends quantitative approaches to fiscal sustainability analysis and brings themtogether in a user-friendly tool applicable in a data-sparse environment. It combines adynamic simulations approach with a steady-state consistency approach. It also incorporatesuser-defined stress tests and stochastic simulations to deal with uncertainty.And it derives the future distribution of debt-output ratios, evaluating the fiscal adjustmentrequired to stabilize them. Value at Risk analysis shows that considerable risksremain unless explicit feedback rules from debt surprises to the primary surplus areimplemented.