Assessing long-term fiscal developments: evidence from Portugal

Antonio Afonso and Ricardo Magalhães Sousa ()

Applied Economics Letters, 2011, vol. 18, issue 1, pages 1-5

Abstract: We use a Three-Stage Least Square (TSLS) method and a system of equations to recursively estimate two components of fiscal policy - responsiveness and persistence - and to infer about the sources of fiscal deterioration (improvement). The results suggest that (i) government spending exhibits higher persistence than government revenue and (ii) government revenue is more responsive to the business cycle than government spending, pointing to fiscal deterioration issues.

Date: 2011
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Related works:
Working Paper: Assessing Long-Term Fiscal Developments: Evidence from Portugal (2009)
Working Paper: Assessing Long-Term Fiscal Developments: Evidence from Portugal (2009)
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