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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2359

Title: 3-Step Analysis of Public Finances Sustainability: the Case of the European Union
Authors: Afonso, António
Rault, Christophe
Keywords: fiscal sustainability
EU
panel cointegration
Issue Date: Jun-2008
Publisher: ISEG – Departamento de Economia
Citation: Afonso, António e Christophe Rault. 2008. "3-Step Analysis of Public Finances Sustainability: the Case of the European Union". Instituto Superior de Economia e Gestão - DE Working papers nº 35-2008/DE/UECE
Series/Report no.: DE Working papers;nº 35-2008/DE/UECE
Abstract: We use a 3-step analysis to assess the sustainability of public finances in the EU27. Firstly, we perform the SURADF specific panel unit root test to investigate the mean-reverting behaviour of general government expenditure and revenue ratios. Secondly, we apply the bootstrap panel cointegration techniques that account for the time series and cross-sectional dependencies of the regression error. Thirdly, we check for a structural long-run equation between general government expenditures and revenues via SUR analysis. While results imply that public finances were not unsustainable for the EU panel, fiscal sustainability is an issue in most countries, with a below unit estimated coefficient of expenditure in the cointegration relation with revenue as the dependent variable.
URI: http://hdl.handle.net/10400.5/2359
ISSN: 0874-4548
Publisher version: https://aquila1.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=26536
Appears in Collections:DE - Documentos de trabalho / Working Papers

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