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

Juan Cuestas and Karsten Steahr

No 2011014, Working Papers from The University of Sheffield, Department of Economics

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 has been analysed by means of unit root tests that account for the possibility of non-linearities and structural changes. The results of the 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 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)
Pages: 21 pages
Date: 2011-05, Revised 2011-05
New Economics Papers: this item is included in nep-eec and nep-tra
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Citations: View citations in EconPapers (2)

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http://www.shef.ac.uk/economics/research/serps/articles/2011_014.html First version, 2011 (application/pdf)

Related works:
Journal Article: Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe (2013)
Working Paper: Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2011014

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