Indicators and Tests of Fiscal Sustainability: An Integrated Approach

Giancarlo Marini and Alessandro Piergallini

No 111, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: This paper shows that indicators and tests of government solvency should not be used alternatively. We present a simple and intuitive procedure to integrate simultaneously the results from the two approaches to fiscal sustainability. An application to U.S. post-World War II data demonstrates the empirical relevance of the proposed strategy. Our results suggest that U.S. fiscal policy is on a sustainable path, since the warning predictions of tax gap indicators merely reflect cyclical factors.

Keywords: Fiscal Sustainability; Fiscal Indicators; Tests of Government Solvency (search for similar items in EconPapers)
JEL-codes: C12 C22 E60 H60 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008-07-11, Revised 2008-07-11
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:rtv:ceisrp:111

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