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Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe

Juan Cuestas and Karsten Staehr ()

No wp2011-08, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This paper analyses the time series properties of the fiscal balance in the 10 EU countries from Central and Eastern Europe. The persistence of shocks in the variable is analysed by means of unit root tests that account for the possibility of non-linearities and structural changes. The results of linear and non-linear unit root tests find only mild evidence in favour of the stationarity hypothesis, with asymmetric effects present in a few cases. After controlling for structural changes in the data generation process, the results point to stochastic stationarity of the series. Thus, in spite of relatively steady headline figures, the public balance processes exhibit substantial instability in the EU countries from Central and Eastern Europe

Keywords: unit roots; structural breaks; budget balance; EU (search for similar items in EconPapers)
JEL-codes: C32 E24 (search for similar items in EconPapers)
Date: 2011-07-13, Revised 2011-07-13
New Economics Papers: this item is included in nep-eec and nep-tra
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Related works:
Journal Article: Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe (2013) Downloads
Working Paper: Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe (2011) Downloads
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