FISCAL SUSTAINABILITY APPROACHES AND EVALUATION OF LITERATURE FOR FISCAL SUSTAINABILITY

The concept of sustainability is associated with many issues in the economic literature. In this respect, sustainable economic growth and sustainable development are among the priorities of the countries. Academic studies on sustainability, related to public economics shaped around in terms of fiscal sustainability. Fiscal sustainability is defined as ensuring the incomes, expenditures and borrowing structure of the countries are transferred to the future in a balanced and consistently. Thus, it is important that the fiscal policy instruments are sustained without any changes in their composition. In this study Fiscal sustainability approaches in the literature; accounting approach, present value constraint approach, human development approach and sudden stop approach are examined. Accounting approach, is aimed to test whether fiscal sustainability conditions are ensured through past fiscal policy implementations and to present policy recommendations for the future. The present value constraint approach is based on the principle that the initial real value of the public debt should be equal to the present value of the future primary surplus and the present value of inflation-related incomes in order to ensure fiscal sustainability. Human development approach is based on a debt sustainability analysis after the needs for human development are satisfied. The sudden stop approach mainly resulted from the financial crises in developing countries. In that case, fiscal sustainability is affected negativelyt because of the halt in capital flow. The main purpose of the study is to examine the theoretical infrastructure for fiscal sustainability and to make a literature review for empirical studies. As a result, based on the evaluations made in the study, it can be stated that the implications of fiscal sustainability vary from country to country and may vary according to the conjuncture and fiscal structure.

Keywords

Fiscal Sustainability, Accounting Approach, Present Valus Constraint Approach, Human Development App