Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282362 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10674
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We assess the drivers of fiscal sustainability in Portugal during the period 1999Q4-2021Q4. We resort to expanding window and Schlicht (2003, 2021)'s time-varying approaches to construct the responses of government revenues to government expenditures and the responses of the primary government balance and the cyclically adjusted primary government balance (CAPB) to the debt-to-GDP ratio. Our results show the prevalence of a Ricardian fiscal regime in Portugal. If the (i-g) differential is positive, the positive response of the primary government balance to the debt-to-GDP ratio is amplified. An improvement in the external accounts, the increase in the European Commission's fiscal rules index and the extension of the debt maturity were beneficial for fiscal sustainability. Sovereign debt rating downgrades implied a posterior fiscal reaction that improves fiscal sustainability. Moreover, fiscal sustainability increased during the implementation of the international financial assistance program to Portugal, between 2011Q2 and 2014Q2.
Subjects: 
fiscal sustainability
primary government balance
government debt
expanding window
time-varying
Portugal
JEL: 
C23
H61
H63
E62
Document Type: 
Working Paper
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