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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2136

Title: What do we really know about fiscal sustainability in the EU? : a panel data diagnostic
Authors: Afonso, António
Rault, Christophe
Keywords: intertemporal budget constraint
fiscal sustainability
EU
panel unit root
panel cointegration.
Issue Date: Oct-2007
Publisher: European Central Bank
Citation: Afonso, António e Christophe Rault. 2007. "What do we really know about fiscal sustainability in the EU? : a panel data diagnostic". European Central Bank working paper series nº 820-2007
Series/Report no.: European Central Bank working paper series;nº 820-2007
Abstract: We assess the sustainability of public finances in the EU15 over the period 1970-2006 using stationarity and cointegration analysis. Specifically, we use panel unit root tests of the first and second generation allowing in some cases for structural breaks. We also apply modern panel cointegration techniques developed by Pedroni (1999, 2004), generalized by Banerjee and Carrion-i-Silvestre (2006) and Westerlund and Edgerton (2007), to a structural long-run equation between general government expenditures and revenues. While estimations point to fiscal sustainability being an issue in some countries, fiscal policy was sustainable both for the EU15 panel set, and within sub-periods (1970-1991 and 1992-2006).
URI: http://hdl.handle.net/10400.5/2136
ISSN: 1725-2806
Publisher version: http://www.ecb.int/pub/pdf/scpwps/ecbwp820.pdf
Appears in Collections:DE - Documentos de trabalho / Working Papers

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