Sustainability and comovement of government debt in EMU Countries: A panel data analysis

Gordon L. Brady and Cosimo Magazzino ()

Southern Economic Journal, 2018, vol. 85, issue 1, 189-202

Abstract: We investigate the sustainability of fiscal policy in a set of 19 European Monetary Union (EMU) countries over the period 1970–2016. Panel unit root tests in the presence of cross‐section dependence show that the government debt series is stationary, indicating that the solvency condition would be satisfied for these countries. This confirms the effectiveness of the austerity measures implemented by these member states. Moreover, an unobserved common factor drives the comovement of government debt in the Eurozone.

Date: 2018
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https://doi.org/10.1002/soej.12269

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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:85:y:2018:i:1:p:189-202

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