Fiscal Sustainability in the European Countries: A Panel ARDL Approach and a Dynamic Panel Threshold Model

María del Carmen Ramos-Herrera and Maria Prats
Additional contact information
María del Carmen Ramos-Herrera: Department of Economic Analysis, Economic Theory, Autonomous University of Madrid, Cantoblanco, 28049 Madrid, Spain
Authors registered in the RePEc Author Service: Maria del Carmen Ramos Herrera ()

Sustainability, 2020, vol. 12, issue 20, 1-14

Abstract: We analyze the fiscal sustainability hypothesis for a panel of 20 European Union countries from 2000 to 2019. In particular, we employ new econometric methodologies that, to the best of our knowledge, are applied for the first time to the study of sovereign fiscal policy sustainability in these economies. Specifically, we estimate the panel ARDL technique, distinguishing between short- and long-run coefficients because the order of integration of our variables is not the same. Moreover, a panel threshold model with endogeneity is considered to investigate whether, departing from a particular threshold, there is different behavior between the government primary balance and public debt, both taken as a ratio of potential GDP. Finally, the panel Granger causality test is implemented to determine the direction of causality or the existence of bidirectional causality.

Keywords: fiscal sustainability; panel ARDL; panel threshold model with endogeneity; panel Granger causality (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.mdpi.com/2071-1050/12/20/8505/pdf (application/pdf)
https://www.mdpi.com/2071-1050/12/20/8505/ (text/html)

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:gam:jsusta:v:12:y:2020:i:20:p:8505-:d:428377

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().