The Global Dimension to Fiscal Sustainability



Table 6: Emerging Market Countries’ Solvency Test

sit = αi + 0.018 bit

Factor

Idiosyncratic

-1.505

2.232*

Notes: This table examines whether we have stationary residuals from the estimated
cointegrating vector (
sit = αi + 0.018bit) obtained from Table 5 and the CupBC estimator.
We use a factor model to account for cross sectional correlation. We use an information
criterion to identify whether there is a factor or not. The maximum number of factors is one.
We use annual data 1991 to 2005 (
N=27, T=15). Star and bold (*) indicates rejection of the
null of unit root at the 5% significance level.

30




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