Innovation science and technologiy 2-tom 6-san (2026) · 421-432-betler
PANEL GMM ANALYSIS OF THE IMPACT OF FACTORS ON FISCAL DEFICIT IN CENTRAL ASIA AND THE CAUCASUS COUNTRIES
Zokirjonov, Muhammadsodiq
Annotaciya
The article investigates the dynamic interplay between public debt, fiscal deficits, and institutional qualityacross eight Central Asian and Caucasus economies (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Armenia,Azerbaijan, and Georgia) over the period 2000-2024. Motivated by persistent endogeneity concerns in the debt-growth literature– including reverse causality, omitted variable bias, and the dynamic panel bias identified by Nickell – the study employs a twostepSystem Generalized Method of Moments (GMM) estimator with the Windmeijer finite-sample correction. The empiricalspecification models fiscal deficit dynamics as a function of lagged fiscal balances, public debt-to-GDP, institutional quality(drawn from the Worldwide Governance Indicators), and a battery of macroeconomic controls. Baseline results indicate that thelagged fiscal deficit coefficient is statistically insignificant and unstable across specifications, while the public debt coefficient ispositive but imprecisely estimated. Subperiod analysis reveals temporal instability in the debt-deficit relationship, shifting fromnegative (pre-2008) to positive (post-2008). Diagnostic tests reveal a persistent overidentification problem (Hansen J p-value of1.000 in all specifications) attributable to the unusually small cross-sectional dimension (N = 8) relative to the time dimension(T = 25) – a panel structure for which System GMM is not optimally suited. The paper concludes that institutional reforms arelikely complements to, rather than substitutes for, numerical fiscal rules, while cautioning that the present findings should betreated as suggestive pending validation on a larger country sample or an estimator better matched to this panel’s dimensions.
public debt; fiscal deficit; institutional quality; System GMM; Central Asia; Caucasus economies JEL Classification: C23, H62, H63, O43
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