Fiscal Sustainability: Another Look at the European case

John Thornton and Olumuyiwa S. Adedeji ()
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Olumuyiwa S. Adedeji: International Monetary Fund, Postal: 700 19th Street NW, Washington DC 20431, U.S.A.

Economia Internazionale / International Economics, 2009, vol. 62, issue 1, 95-102

Abstract: Recent research using time series cointegration techniques has suggested that fi scal policy in the EU-15 countries may have been on unsustainable path during 1970-2003. However, the time series techniques employed are know to have low power in small samples. The results from employing panel cointegration techniques that have higher power in small samples indicate that government revenue and expenditure in these countries were non-stationary and cointegrated series, and that the long-run cointegrating relation was consistent with ‘strong’ fi scal sustainability.

Keywords: European Union; Fiscal Policy Sustainability; Panel Cointegration (search for similar items in EconPapers)
JEL-codes: H62 H63 (search for similar items in EconPapers)
Date: 2009
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