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Fiscal Sustainability: Another Look at the European case

Author

Listed:
  • Thornton, John

    (Bangor Business School, Bangor University)

  • Adedeji, Olumuyiwa S.

    (International Monetary Fund)

Abstract

Recent research using time series cointegration techniques has suggested that fi scal policy in the EU-15 countries may have been on unsustainable path during 1970-2003. However, the time series techniques employed are know to have low power in small samples. The results from employing panel cointegration techniques that have higher power in small samples indicate that government revenue and expenditure in these countries were non-stationary and cointegrated series, and that the long-run cointegrating relation was consistent with ‘strong’ fi scal sustainability.

Suggested Citation

  • Thornton, John & Adedeji, Olumuyiwa S., 2009. "Fiscal Sustainability: Another Look at the European case," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(1), pages 95-102.
    • Handle: RePEc:ris:ecoint:0015
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    European Union; Fiscal Policy Sustainability; Panel Cointegration;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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