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Title:Sustainability of Portuguese fiscal policy in historical perspective PDF Logo
Authors:Marinheiro, Carlos Jose Fonseca
Issue Date:2005
Series/Report no.:CESifo working papers 1399
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.
Subjects:fiscal sustainability
sustainability of public debt
intertemporal budget constraint
government deficits and debt
Portugal
JEL:H60
E60
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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