Assessing Long-Term Fiscal Developments: a New Approach

Antonio Afonso, Luca Agnello (), Davide Furceri () and Ricardo Jorge Magalhães de Abreu Santos Sousa ()

No 7/2009, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We use a new approach to assess long-term fiscal developments. By analyzing the time-varying 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.

Keywords: Fiscal Deterioration; Fiscal Sustainability. (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-cba, nep-eec and nep-mac
Date: 2009
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Working Paper: Assessing long-term fiscal developments - a new approach (2009)
Working Paper: Assessing Long-Term Fiscal Developments: a New Approach (2009)
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