Sustainability of public finances in the ecuadorian economy 2001 - 2019
DOI:
https://doi.org/10.31243/bcoyu.25.2020.920Keywords:
Budgetary Restriction, Fiscal Deficit, Fiscal Policy, Fiscal Sustainability, Public DebtAbstract
The Ecuadorian economy between 2001 and 2019 experiences economic growth based on a new oil boom and state intervention through fiscal policy. Using the information from the Central Bank, the income and expenses of the non-financial public sector are quantified, the primary and global deficit is established in the analysis period and the level of public indebtedness. The research question is: How much budget surplus should be generated by public finances and the level of economic activity to pay the debt, plus its financial costs? To determine the degree of current and future financial solvency, an econometric model of budget constraint was applied where an index is obtained in which the government debt is sustainable when the real GDP growth rate is greater than the real interest rate of the debt. It is concluded that, between 2001 and 2019, the public finances of the Ecuadorian economy show two clearly differentiated fiscal periods: The first 2001 - 2008, are sustainable, because the results of the model demonstrate this. The second 2009 - 2019, except 2011, shows that public finances are unsustainable.
URL: https://revistas.uta.edu.ec/erevista/index.php/bcoyu/article/view/920
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