Sustainability of Portuguese Fiscal Policy in Historical Perspective

Carlos Marinheiro ()

No 2005-01, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: This paper analyses the sustainability of Portuguese public finances, making use of a long dataset with more than a full century of observations. The use of such a long dataset is appropriate because both unit root and cointegration tests require a long period of data. The sustainability testing procedure is based on unit root and cointegration tests. We find considerable evidence in favour of sustainability for the 1903-2003 period. The overall conclusion of sustainability for the 1903-2003 period is not maintained for the more recent 1975-2003 period, which is characterised by the largest GDP deficit ratios of our sample. This latter period appears to signal a shift to an unsustainable path in Portuguese fiscal policy. Hence, our results suggest that fiscal consolidation efforts must, in fact, be continued in Portugal.

Keywords: Fiscal sustainability; sustainability of public debt; intertemporal budget constraint; government deficits and debt; Portugal (search for similar items in EconPapers)
JEL-codes: E60 H60 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Empirica, 33(2-3): 155-179, 2006.

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Related works:
Working Paper: Sustainability of Portuguese Fiscal Policy in Historical Perspective (2005)
Working Paper: Sustainability of Portuguese Fiscal Policy in Historical Perspective (2005)
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