Government Solvency or just Pseudo-Sustainability? a Long-Run Multicointegration Approach for Spain
Regina Escario (),
María Gadea () and
Marcela Sabate ()
Documentos de Trabajo from Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza
The concept of multicointegration allows to test the sustainability of public finances by assessing dynamic equilibrium relationships between flow and stock variables. This paper focus on the very long-run Spanish case, characterized by the more or less intensive use of monetization to offset the recurrent deficits. The results support that seigniorage allowed the governments to guarantee –even artificially– a pseudo-sustainability for their budgetary path. Besides, the possibility of there being a structural break during the period is also taken into account.
Keywords: deficit; seigniorage; sustainability; multicointegration (search for similar items in EconPapers)
JEL-codes: E5 H6 N1 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:zar:wpaper:dt2009-07
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