Testing Stationarity of Budgetary Position in Developing Countries
Evan Lau (),
Ahmad Zubaidi Baharumshah,
Shazali Abu Mansor and
Additional contact information
Shazali Abu Mansor: Universiti Malaysia Sarawak
International Econometric Review (IER), 2009, vol. 1, issue 2, 77-87
In this paper, we examine stationarity properties of data on budget deficits for a cluster of twenty-seven developing countries (D-27) for the period spanning 1970 to 2003. It has been argued in the literature that this statistical property correlates well with the economic property of sustainability of the budget deficit. The univariate unit root tests indicated a non-stationary process of I(1) with the exception of three countries. However, the non-stationary properties were rejected when the panel unit roots procedures were adopted. Since panel procedures provide greater power, the statistical evidence favors stationarity. This in turn suggests that budgets deficits in our sample of countries are sustainable, an important conclusion with many real world economic implications. The conflict between single country results and panel results suggests that univariate procedures may lead to the wrong conclusions.
Keywords: Budgetary Position; Stationarity; Sustainability; Government Intertemporal Budget Constraint (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:erh:journl:v:1:y:2009:i:2:p:77-87
Access Statistics for this article
International Econometric Review (IER) is currently edited by Asad Zaman
More articles in International Econometric Review (IER) from Econometric Research Association Contact information at EDIRC.
Series data maintained by M. F. Cosar ().