Indicators and Tests of Sustainability: The Italian Case

Matteo Formenti ()

Rivista di Politica Economica, 2008, vol. 98, issue 6, 123-160

Abstract: The issue of sustainability of Italian fiscal policy in the period 1970-2006 is studied with two instruments: indicators and tests. The indicators Primary Gap, Tax Gap developed by Chouraqui et al. (1990) and S2 by the European Commission show a nonsustainable fiscal policy. Tests of sustainability following Trehan and Walsh (1988), Hakkio and Rush (1991) and Bohn (2008) show an opposite result accepting the sustainability path of fiscal variables. According to the strategy proposed by De Luzenberger and Marini (1993) a Chow-type test, that confirms a systematic change of fiscal policy in 1992-1993, permits to discern the two conflicting results in favour of the indicators’ response.

Keywords: fiscal sustainability; fiscal indicators and tests of sustainability, Chow test (search for similar items in EconPapers)
JEL-codes: C12 C22 E60 H60 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:rpo:ripoec:v:98:y:2008:i:6:p:123-160

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