Public debt dynamics and fiscal sustainability in selected North African countries: new evidence from recurrent explosive behavior tests and quantile unit root analysis
Sidi Mohammed Chekouri, Abderrahim Chibi, Mohamed Benbouziane
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Abstract
In the aftermath of the COVID-19 pandemic crisis, government debt has surged to unprecedented levels in most countries, including those of North Africa. In this study, we investigate the issue of public debt sustainability in four North African countries (Algeria, Libya, Morocco, and Tunisia). The Generalized Supremum Augmented Dickey–Fuller (GSADF) results show that Algeria, Libya, Morocco, and Tunisia have experienced periods of explosive public debt during the studied period. The identified episodes of explosive debt behavior can be seen as periods of unsustainable fiscal policy. Moreover, the Quantile Auto-Regressive (QAR) unit root results point to strong debt sustainability at the lower quantiles for the selected countries, while at the middle and upper quantiles, public debt exhibits an unsustainable dynamic. This finding, therefore, points to weak sustainability of debt and fiscal policies in Algeria, Morocco, Libya, and Tunisia. This paper provides further evidence that fiscal policies have become more unsustainable than sustainable in recent years in these countries. Consequently, fiscal policymakers in MENA countries should not overlook the unsustainability of public debt and its various effects when developing any strategy aimed at stimulating the economy through ever larger debt levels.
期刊介绍：
Economic Change and Restructuring has been accepted for SSCI and will get its first Impact Factor in 2020!Since the early 1990s fundamental changes in the world economy, under the auspices of increasing globalisation, have taken place
On one hand, the disappearance of the centrally planned economies and the progressive formation of market-oriented economies, have brought about countless systematic changes, where new economic structures, institutions, competences and skills involve complex processes, changes which are still underway and which necessitate adaptation and restructuring to form competitive market economies.
On the other hand, many developing economies are making great strides as regards economic reform and liberalisation, and are emerging as new global players. They show an innovative capacity to position themselves in the global economy and to compete with industrialised countries, which are generally believed to be witnessing the rapid erosion of their established positions. These developments are accompanied by the exacerbation of the world competition.
Both processes involve transition and the emerging economies, in searching for a new role and scope for public policies and for a new balance between public and private partnership, seem to currently be converging, especially with respect to the policies needed to create appropriate and effective market institutions and integrated reform policies, and to increase the standards of the population''s education levels.
Thus, liberalisation and development policies, in attempting to strike a difficult balance between social and environmental needs, must be integrated more coherently. This complexity calls for new analytical and empirical approaches that can explain these new phenomena, which often go beyond the over-simplified facts and conventional ''wisdom'' that emerged at the start of the transition in the early 1990s.
Economic Change and Restructuring (formerly ''Economics of Planning''), by keeping abreast of developments affecting both transitional and emerging economies, is aimed to attract original empirical and policy analysis contributions that are focused on various issues, including macroeconomic analysis, fiscal issues, finance and banking, industrial and trade development, and regional and local development issues.
The journal aspires to publish cutting edge research and to serve as a forum for economists and policymakers working in these fields.Officially cited as: Econ Change Restruct
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