Sustainability of the Deficit Process with Structural Shifts

Carmela E Quintos

Journal of Business & Economic Statistics, 1995, vol. 13, issue 4, 409-17

Abstract: This paper discusses the condition for deficit sustainability and searches for shifts in the structure of U.S. deficit policy. The author shows that, contrary to the current literature, cointegration between revenues and expenditures inclusive of debt payment is not a necessary but a sufficient condition for a strict interpretation of deficit sustainability. The necessary and sufficient condition is that debt grow slower than the borrowing rate. Using tests that search for shifts in the rank of the cointegrating matrix, the author shows that the deficit is sustainable despite the failure of cointegration in the 1980s.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (313)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:13:y:1995:i:4:p:409-17

Ordering information: This journal article can be ordered from
http://www.amstat.org/publications/index.html

Access Statistics for this article

Journal of Business & Economic Statistics is currently edited by Jonathan H. Wright and Keisuke Hirano

More articles in Journal of Business & Economic Statistics from American Statistical Association
Bibliographic data for series maintained by Christopher F. Baum ().