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

Juan Carlos Cuestas; Paulo José Regis

doi:10.1016/j.econmod.2017.08.003

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

Juan Carlos Cuestas, Paulo José Regis^*

^*Corresponding author for this work

International Business School Suzhou

Research output: Contribution to journal › Article › peer-review

19 Citations (Scopus)

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.

Original language	English
Pages (from-to)	356-359
Number of pages	4
Journal	Economic Modelling
Volume	68
DOIs	https://doi.org/10.1016/j.econmod.2017.08.003
Publication status	Published - Jan 2018

Keywords

Nonlinearities
Public debt
Structural breaks
Sustainability

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10.1016/j.econmod.2017.08.003

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title = "On the dynamics of sovereign debt in China: Sustainability and structural change",

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.",

keywords = "Nonlinearities, Public debt, Structural breaks, Sustainability",

author = "Cuestas, {Juan Carlos} and Regis, {Paulo Jos{\'e}}",

note = "Funding Information: The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank or the Eurosystem. Comments from two anonymous referees and the editor are gratefully acknowledged. The usual disclaimer applies. Juan Carlos Cuestas gratefully acknowledges the financial support from the MINECO (Ministerio de Econom{\'i}a y Competitividad, Spain) research grant ECO2014-58991-C3-2-R and the Generalitat Valenciana project AICO/2016/038. Publisher Copyright: {\textcopyright} 2017 Elsevier Ltd",

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doi = "10.1016/j.econmod.2017.08.003",

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AU - Regis, Paulo José

N1 - Funding Information: The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank or the Eurosystem. Comments from two anonymous referees and the editor are gratefully acknowledged. The usual disclaimer applies. Juan Carlos Cuestas gratefully acknowledges the financial support from the MINECO (Ministerio de Economía y Competitividad, Spain) research grant ECO2014-58991-C3-2-R and the Generalitat Valenciana project AICO/2016/038. Publisher Copyright: © 2017 Elsevier Ltd

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N2 - 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.

AB - 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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KW - Structural breaks

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JO - Economic Modelling

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

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Keywords

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