Quantitative approaches to fiscal sustainability analysis: a case study of Turkey since the 2001 crisis

This case study of fiscal sustainability in Turkey after the crisis in 2001 reviews and
extends quantitative approaches to fiscal sustainability analysis and brings them
together in a user-friendly tool applicable in a data-sparse environment. It combines a
dynamic simulations approach with a steady-state consistency approach. It also incorporates
user-defined stress tests and stochastic simulations to deal with uncertainty.
And it derives the future distribution of debt-output ratios, evaluating the fiscal adjustment
required to stabilize them. Value at Risk analysis shows that considerable risks
remain unless explicit feedback rules from debt surprises to the primary surplus are
implemented.