Using panel data to test for fiscal sustainability within the European Union

Prohl, Silika and Westerlund, Joakim 2009, Using panel data to test for fiscal sustainability within the European Union, Finanz-Archiv: Zeitschrift für das Gesamte Finanzwesen, vol. 65, no. 2, pp. 246-269.

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Title Using panel data to test for fiscal sustainability within the European Union
Author(s) Prohl, Silika
Westerlund, JoakimORCID iD for Westerlund, Joakim
Journal name Finanz-Archiv: Zeitschrift für das Gesamte Finanzwesen
Volume number 65
Issue number 2
Start page 246
End page 269
Total pages 24
Publisher Mohr Siebeck GmbH & Co. KG
Place of publication Stuttgart, Germany
Publication date 2009-06
ISSN 0015-2218
Keyword(s) Fiscal sustainability
Panel cointegration
Panel unit root
Summary Most empirical evidence suggests that the sustainability hypothesis, stating that government revenues and expenditures should cointegrate with a unit slope on expenditures, does not hold within the European Union, a finding at odds with many theoretical models. This paper argues that these results can be attributed in part to the use of in-appropriate time-series techniques, and that the use of panel data can generate more accurate tests. By using newly devised panel unit-root and cointegration techniques it is shown that the sustainability hypothesis cannot be rejected when applied to a panel composed of 15 European countries between 1970 and 2004. © 2009 Mohr Siebeck.
Language eng
Field of Research 150202 Financial Econometrics
Socio Economic Objective 919999 Economic Framework not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2009, Mohr Siebeck GmbH & Co. KG
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Economics
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