Assessing Long-Term Fiscal Developments: Evidence from Portugal

Antonio Afonso and Ricardo Jorge Magalhães de Abreu Santos Sousa ()

No 2009/03, Working Papers from Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.

Abstract: Drawing on quarterly data for Portugal, we use a Three-Stage Least Square 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.

Keywords: Fiscal deterioration; Portugal. (search for similar items in EconPapers)
JEL-codes: E62 H50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2009-01
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Working Paper: Assessing Long-Term Fiscal Developments: Evidence from Portugal (2009)
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