Optimal fiscal policy rule for achieving fiscal sustainability: the Japanese case

2019 ◽  
Vol 21 (2) ◽  
pp. 156 ◽  
Author(s):  
Naoyuki Yoshino ◽  
Tetsuro Mizoguchi ◽  
Farhad Taghizadeh Hesary
Keyword(s):  
Fiscal Policy ◽  
Fiscal Sustainability ◽  
Policy Rule ◽  
Japanese Case ◽  
Optimal Fiscal Policy

Optimal fiscal policy rule for achieving fiscal sustainability: the Japanese case

2019 ◽  
Vol 21 (2) ◽  
pp. 156
Author(s):  
Farhad Taghizadeh Hesary ◽  
Naoyuki Yoshino ◽  
Tetsuro Mizoguchi
Keyword(s):  
Fiscal Policy ◽  
Fiscal Sustainability ◽  
Policy Rule ◽  
Japanese Case ◽  
Optimal Fiscal Policy

Policy asymmetries and fiscal sustainability: evidence from Nigeria

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Opeoluwa Adeniyi Adeosun ◽  
Olumide Steven Ayodele ◽  
Olajide Clement Jongbo
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Markov Switching ◽  
Fiscal Sustainability ◽  
Constant Parameter ◽  
Policy Rule ◽  
Content Type ◽  
Sustainability Analysis ◽  
Debt Dynamics ◽  
Fiscal Balance

PurposeThis study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.Design/methodology/approachThis is methodologically achieved by estimating the baseline constant-parameter and Markov regime switching fiscal models. The asymmetric autoregressive distributed lag fiscal model is also employed to substantiate the differential responses of fiscal authorities to public debt.FindingsThe baseline constant-parameter fiscal model provides mixed results of sustainable and unsustainable fiscal policy. The inconclusiveness is adduced to instability in primary fiscal balance–public debt dynamics. This makes it necessary to capture regime switches in the fiscal policy rule. The Markov switching estimations show a protracted fiscal unsustainable regime that is inconsistent with the intertemporal budget constraint (IBC). The no-Ponzi game and debt stabilizing results of the Markov switching fiscal model further revealed that the transversality and debt stability conditions were not satisfied. Additional findings from the asymmetric autoregressive model estimation show that fiscal consolidation responses vary with contraction and expansion in output and spending, coupled with downturns and upturns in public debt dynamics in both the long and short run. These findings thus confirm the presence of asymmetries in the fiscal policy authorities' reactions to public debt. Further, additional evidences show the violation of the IBC which is exacerbated by the deleterious effect of the pro-cyclical fiscal policy response in boom on the improvement of the primary fiscal balance.Originality/valueThis study deviates from the extant literature by accommodating time variation, periodic switches and fiscal policy asymmetries in the fiscal sustainability analysis of Nigeria.

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