chse_fdi — Fiscal Dominance Index

Syntax

chse_fdi, vt(varname|#) kcb(varname|#)
[lambda(#) rhoratio(#) generate(stub) replace]

Description

chse_fdi computes the Fiscal Dominance Index (FDI) from the CHSE
central bank application (Corollary 11.1):

FDI = V_T * lambda_R / (K_CB * rho_kappa/rho_nu)

where V_T is a political capital or fiscal pressure index, K_CB is the
central bank independence score (Dincer-Eichengreen scale), lambda_R is
the reframing efficiency parameter, and rho_kappa/rho_nu is the ratio of
credibility to manipulation capital replenishment rates.

Regime classification:

FDI Regime

FDI < 0.5 Monetary dominance
0.5 <= FDI <= 1 Contested
FDI > 1 Fiscal dominance

The implied HSI is 1/FDI: monetary dominance corresponds to high HSI (strong
central bank), fiscal dominance to low HSI (weak institutional resistance).

Options

vt(varname|#) V_T: political capital / fiscal pressure index.

kcb(varname|#) K_CB: central bank independence score. Typically on
a 0-1 scale (Dincer-Eichengreen) or similar.

lambda(#) reframing efficiency lambda_R. Default 1.0.

rhoratio(#) ratio rho_kappa/rho_nu. Default 1.0.

generate(stub) prefix for generated variables. Creates:
stub_fdi, stub_fdi_regime, stub_hsi.

Saved results

r(FDI) Computed FDI value
r(HSI) Implied HSI (= 1/FDI)
r(regime) Regime string (monetary/contested/fiscal)
r(lambda_R) lambda_R used
r(rho_ratio) rho ratio used

Examples

Replicate Figure 5 (paper examples):

. input str8 country str8 period float(vt kcb)
. "Chile" "2000-22" 0.21 0.95
. "US" "2000-07" 0.17 0.94
. "US" "2020-23" 0.51 0.94
. "Brazil" "2015-18" 0.77 0.85
. "Zambia" "2020-23" 0.94 0.67
. "Turkey" "2021-23" 0.82 0.45
. end
. chse_fdi, vt(vt) kcb(kcb) gen(chse) replace
. list country period chse_fdi chse_fdi_regime

Single country:

. chse_fdi, vt(0.82) kcb(0.45) // Turkey 2021-23: FDI=1.82, fiscal

References

Nityahapani (2025). Contested Hierarchy with Social Embedding.
Corollary 11.1 (Endogenous Fiscal Dominance), Section 11.

Author

Nityahapani

chse package v1.0.0