The behaviour of US and UK public debt: further evidence based on time varying parameters

Süleyman Bolat (bolatsuleyman80@gmail.com), Aviral Tiwari and Mihai Mutascu
Additional contact information
Süleyman Bolat: Aksaray University

Working Papers from HAL

Abstract: The paper investigates whether US and UK have followed sustainable debt policies during the period 1970-2012, by exploring the reaction of the primary surplus as percentage of GDP to variations in the debt to GDP ratio, as a powerful test. The main results reveal that the coefficient for UK is negative and significant, while for the US, we are unable to find a clear-cut evidence of the sustainability of public debt as the coefficient is also negative, but insignificant. In the case of the UK, the outputs reveal that government did not raise the primary surplus as the government debt increased rather reduced it and this reduction has been significant. On the other hand, the significance of the reaction coefficient demonstrates that the reaction of the primary surplus to increases in public debt varies over time. All these evidences allow us to appreciate that the fiscal policy in the UK is not sustainable in the sense of satisfying of intertemporal budgetary constrain.

Keywords: public debt; budget deficit; time varying parameter; intertemporal constraint; sustainability (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-pbe
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01107962
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://shs.hal.science/halshs-01107962/document (application/pdf)

Related works:
Journal Article: The Behaviour of US and UK Public Debt: Further Evidence Based on Time Varying Parameters (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01107962

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).