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Assessing Long-Term Fiscal Developments: a New Approach

Antonio Afonso, Luca Agnello (), Davide Furceri () and Ricardo M. Sousa ()

No 2009/19, Working Papers Department of Economics from ISEG - School of Economics and Management, Department of Economics, University of Lisbon

Abstract: We use a new approach to assess long-term fiscal developments. By analyzing the timevarying behaviour of the two components of government spending and revenue – responsiveness and persistence – we are able to infer about the sources of fiscal behaviour. Drawing on quarterly data we estimate recursively these components within a system of government revenue and spending equations using a Three-Stage Least Square method. In this way we track fiscal developments, i.e. possible fiscal deteriorations and/or improvements for eight European Union countries plus the US. Results suggest that positions have not significantly changed for Finland, France, Germany, Spain, the United Kingdom and the US, whilst they have improved for Belgium, Italy, and the Netherlands.. KEY Words: Fiscal Deterioration, Fiscal Sustainability

JEL-codes: E62 H50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
Date: 2009-03
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Journal Article: Assessing long-term fiscal developments: A new approach (2011) Downloads
Working Paper: Assessing long-term fiscal developments - a new approach (2009) Downloads
Working Paper: Assessing Long-Term Fiscal Developments: a New Approach (2009) Downloads
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More papers in Working Papers Department of Economics from ISEG - School of Economics and Management, Department of Economics, University of Lisbon
Address: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
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