Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57779 
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dc.contributor.authorPriesmeier, Christophen
dc.contributor.authorKoester, Gerrit B.en
dc.date.accessioned2012-05-03-
dc.date.accessioned2012-05-09T09:58:33Z-
dc.date.available2012-05-09T09:58:33Z-
dc.date.issued2012-
dc.identifier.isbn978-3-86558-805-0en
dc.identifier.urihttp://hdl.handle.net/10419/57779-
dc.description.abstractThe empirical and theoretical literature on long-term relationships in public finance is dominated by two approaches: Fiscal sustainability and Wagner's law of an increasing state activity. In this paper, we argue that these two relationships should be analyzed simultaneously and not separately. We show how Wagner's law might influence fiscal sustainability and how the interaction of the two can be modelled using vector error correction models that include public expenditures, revenues and GDP. For Germany, we find strong evidence for Wagner's law throughout the whole period analyzed (1960-2007), while our results indicate sustainability of public finances only until 1973. We show that, for the period after 1973, it is the interaction of permanent expenditure increases and revenue reductions resulting from fiscal policy reactions to the oil crisis and Wagner's law that ruins the sustainability of public finances in Germany. Our findings underline the importance of the German debt brake for re-establishing sustainable public finances even under Wagner's law.en
dc.language.isoengen
dc.publisher|aDeutsche Bundesbank |cFrankfurt a. M.en
dc.relation.ispartofseries|aBundesbank Discussion Paper |x08/2012en
dc.subject.jelH63en
dc.subject.jelH19en
dc.subject.jelH50en
dc.subject.jelE62en
dc.subject.ddc330en
dc.subject.keywordFiscal sustainabilityen
dc.subject.keywordWagner's lawen
dc.subject.keywordStructural breaksen
dc.subject.keywordCointegrationen
dc.subject.keywordVector error correction modelsen
dc.titleDoes Wagner's law ruin the sustainability of German public finances?-
dc.typeWorking Paperen
dc.identifier.ppn71512143Xen
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:bubdps:082012en

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