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Safe Debt and Uncertainty in Emerging Markets [electronic resource] : An Application to South Africa, Saxegaard, Magnus..

Author/Creator:
Saxegaard, Magnus.
Publication:
Washington, D.C. : International Monetary Fund, 2014.
Series:
IMF eLibrary
IMF Working Papers: Working Paper No. 14/231
Format/Description:
Government document
Book
1 online resource (27 p.)
Local subjects:
Debt ceilings.
debt ceilings.
Debt sustainability.
Econometric models.
Emerging markets.
Fiscal policy.
Public debt.
Vector autoregression.
South Africa.
Summary:
This paper develops a methodology for estimating a safe public debt level that would allow countries to remain below a maximum sustainable debt limit, taking into account the impact of uncertainty. Our analysis implies that fiscal policy should target a debt level well below the debt ceiling to allow space to absorb shocks that are likely to hit the economy. To illustrate our findings we apply the methodology to estimate a safe debt level for South Africa. Our results suggest that South Africa's debt ceiling is around 60 percent of GDP, although uncertainty is high. Simulations suggest targeting a debt-to-GDP ratio of 40 percent of GDP would allow South Africa to remain below this debt ceiling over the medium-term with a high degree of confidence.
Notes:
Description based on print version record.
Contributor:
Saxegaard, Magnus.
Other format:
Print Version:
ISBN:
1498399436:
9781498399432
ISSN:
1018-5941
Publisher Number:
10.5089/9781498399432.001
Access Restriction:
Restricted for use by site license.
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