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On the dynamics of sovereign debt in China: sustainability and structural change

On the dynamics of sovereign debt in China: sustainability and structural change
On the dynamics of sovereign debt in China: sustainability and structural change

The dynamics of public debt are an important determinant of the macroeconomic environment of an economy and of the investment climate in the private sector. There have been concerns recently about the sustainability of debt in China, given the surge in the fiscal deficit in the last few years that has aided economic activity. This paper aims to shine some light on the dynamics of public debt in the Chinese economy given the risk of a debt crisis, taking nonlinearities and structural breaks into account. Our results show that caution needs to be exercised as there was a clear trend in 2014 towards an unsustainable path in the debt-to-GDP ratio.

Nonlinearities, Public debt, Structural breaks, Sustainability
0264-9993
356-359
Cuestas, Juan Carlos
e21c853f-d345-45d1-9a3c-40ef510a1e5f
Regis, Paulo José
d696452e-72ef-48bc-9409-80996e297ca7
Cuestas, Juan Carlos
e21c853f-d345-45d1-9a3c-40ef510a1e5f
Regis, Paulo José
d696452e-72ef-48bc-9409-80996e297ca7

Cuestas, Juan Carlos and Regis, Paulo José (2018) On the dynamics of sovereign debt in China: sustainability and structural change. Economic Modelling, 68, 356-359. (doi:10.1016/j.econmod.2017.08.003).

Record type: Article

Abstract

The dynamics of public debt are an important determinant of the macroeconomic environment of an economy and of the investment climate in the private sector. There have been concerns recently about the sustainability of debt in China, given the surge in the fiscal deficit in the last few years that has aided economic activity. This paper aims to shine some light on the dynamics of public debt in the Chinese economy given the risk of a debt crisis, taking nonlinearities and structural breaks into account. Our results show that caution needs to be exercised as there was a clear trend in 2014 towards an unsustainable path in the debt-to-GDP ratio.

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2018 Cuestas Regis ECMODE OA draft - Accepted Manuscript
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More information

Accepted/In Press date: 9 August 2017
Published date: 1 January 2018
Keywords: Nonlinearities, Public debt, Structural breaks, Sustainability

Identifiers

Local EPrints ID: 439070
URI: http://eprints.soton.ac.uk/id/eprint/439070
ISSN: 0264-9993
PURE UUID: 198aa3b8-3134-47c1-8b5d-95ab47d022a7
ORCID for Paulo José Regis: ORCID iD orcid.org/0000-0002-3256-464X

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Date deposited: 02 Apr 2020 16:34
Last modified: 28 Apr 2022 04:58

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Author: Juan Carlos Cuestas

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