The Intertemporal Government Budget Constraint in the U.K., 1961-1986

Ronald MacDonald and A E H Speight

The Manchester School of Economic & Social Studies, 1990, vol. 58, issue 4, 329-47

Abstract: In this paper, the intertemporal government budget constraint is implemented using a U.K. data base. In particular, the recently developed cointegration methodology is utilized to test whether the U.K. authorities engaged in bubble finance over the period 1961 to 1986. The authors' results are somewhat mixed in that although they find evidence of cointegration between government debt and an appropriate measure of the government surplus, they find that a vector autoregressive representation leads to a rejection of the intertemporal budget constraint. A novel aspect of their implementation concerns an adjustment for the effects of north sea oil on U.K. government finances. Copyright 1990 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:58:y:1990:i:4:p:329-47

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