Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153342
Authors: 
Afonso, António
Rault, Christophe
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper 908
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 meanreverting behaviour of general government expenditure and revenue 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 with revenue as the dependent variable.
Subjects: 
EU
Fiscal sustainability
panel cointegration
JEL: 
C23
E62
H62
Document Type: 
Working Paper

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