Fiscal Sustainability: The Unpleasant European Case

Antonio Afonso

FinanzArchiv: Public Finance Analysis, 2005, vol. 61, issue 1, 19-44

Abstract: The sustainability of fiscal deficits has been receiving increasing attention. The issue is paramount for the newly formed euro area, and that is one of the motivations of this paper. In order to assess the sustainability of budget deficits, cointegration tests between public expenditures and public revenues, allowing for structural breaks, are performed for the EU-15 countries for the 1970-2003 period. The "unpleasant" empirical results show that with few exceptions fiscal policy may not have been sustainable. EU governments therefore may risk becoming inherently highly indebted, even though the debt-to-GDP ratios seemed to be somehow stabilizing at the end of the 1990s.

Keywords: budget deficit; intertemporal budget constraint; fiscal policy sustainability; European Union (search for similar items in EconPapers)
JEL-codes: H62 H63 (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (218)

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/fiscal-sust ... 16280015221053722532
Fulltext access is included for subscribers to the printed version.

Related works:
Working Paper: Fiscal Sustainability: the Unpleasant European Case (2004)
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:mhr:finarc:urn:sici:0015-2218(200503)61:1_19:fstuec_2.0.tx_2-r

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

Access Statistics for this article

FinanzArchiv: Public Finance Analysis is currently edited by Alfons Weichenrieder, Ronnie Schöb and Jean-François Tremblay

More articles in FinanzArchiv: Public Finance Analysis from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().