What do we really know about fiscal sustainability in the EU? A panel data diagnostic

Christophe Rault and Antonio Alfonso

No wp893, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

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)

Keywords: intertemporal budget constraint; fiscal sustainability; EU; panel unit root; panel cointegration (search for similar items in EconPapers)
JEL-codes: C23 E62 H62 H63 (search for similar items in EconPapers)
Pages: pages
Date: 2007-10-01
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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Related works:
Journal Article: What do we really know about fiscal sustainability in the EU? A panel data diagnostic (2010)
Working Paper: What do we really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know About Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2008)
Working Paper: What do we Really Know about Fiscal Sustainability in the EU ? A Panel Data Diagnostic (2008)
Working Paper: What do we really know about fiscal sustainability in the EU? A panel data diagnostic (2007)
Working Paper: What do we really know about fiscal sustainability in the EU? A panel data diagnostic (2007)
Working Paper: What We Really Know about Fiscal Sustainability in the EU? A Panel Data Diagnostic (2007)
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