Analytical Framework for Fiscal Sustainability: A Review

Abstract

Abstract Continuous assessment of fiscal sustainability is essential to macroeconomic policy research for identifying the sources of risk and vulnerability in the fiscal and macro structure of a country and suggesting appropriate policy to avoid abrupt macroeconomic crises. In this context, this review-cum-technical note is an attempt to provide theoretical and empirical backgrounds for assessing the soundness of a country’s current and future fiscal policies. Since fiscal sustainability analysis is a multidimensional problem, the present study presents various approaches to fiscal sustainability with theoretical and empirical frameworks to understand the issue from an academic as well as practitioner’s perspective.