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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26438
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| Title: | | 3-Step analysis of public finances sustainability: the case of the European Union  |
| Authors: | | Afonso, António Rault, Christophe |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2393 |
| Abstract: | | We use a 3-step analysis to assess the sustainability of public finances in the EU27. Firstly, we perform the SURADF specific panel unit root test to investigate the mean-reverting behaviour of general government expenditures and revenues ratios. Secondly, we apply the bootstrap panel cointegration techniques that account for the time series and cross-sectional dependencies of the regression error. Thirdly, we check for a structural long-run equation between general government expenditures and revenues via SUR analysis. While results imply that public finances were not unsustainable for the EU panel, fiscal sustainability is an issue in most countries, with a below unit estimated coefficient of expenditure in the cointegration relation. |
| Subjects: | | Fiscal sustainability EU panel cointegration |
| JEL: | | C23 E62 H62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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