The sustainability of Fiji's budget deficit: An econometric analysis

Paresh Kumar Narayan, Seema Wati Dhar Narayan

Research output: Contribution to journalArticleResearchpeer-review

14 Citations (Scopus)

Abstract

The sustainability of Fiji's budget deficit is examined here within the framework of inter-temporal budget constraint theory, where government revenue is modelled as a function of government expenditure. An error-correction mechanism test for cointegration finds that government revenue and expenditure are cointegrated, which provides some support for the position that Fiji's budget deficit is sustainable in the long run. It is argued that more government expenditure on capital investment will ensure a broader revenue base and reduce the risk of a budget deficit explosion.

Original languageEnglish
Pages (from-to)77-90
Number of pages14
JournalPacific Economic Bulletin
Volume18
Issue number2
Publication statusPublished - 2003

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