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Tracking fiscal discipline. Looking for a PIIGS on the wing

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  • David Neto

Abstract

This paper revisits fiscal sustainability conditions by relaxing the long-run time-invariance restriction on the parameters commonly imposed in the existing literature. For this purpose, we propose to extend the stock-flow econometric analysis, which bridge the use of government's intertemporal budget constraint as well as a government's fiscal manoeuvre, by allowing time-varying multicointegration. We applied the procedure to the Portuguese case. We found that fiscal practice has taken various directions in this country since the end of the 90s, involving different situations regarding fiscal sustainability.

Suggested Citation

  • David Neto, 2020. "Tracking fiscal discipline. Looking for a PIIGS on the wing," International Economics, CEPII research center, issue 163, pages 147-154.
    • Handle: RePEc:cii:cepiie:2020-q3-163-10
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    File URL: https://www.sciencedirect.com/science/article/pii/S2110701719301994
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    Citations

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    Cited by:

    1. Neto, David, 2021. "Adaptive LASSO for selecting Fourier coefficients in a functional smooth time-varying cointegrating regression: An application to the Feldstein–Horioka puzzle," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 179(C), pages 253-264.
    2. Gozde Es POLAT & Onur POLAT, 2021. "Fiscal sustainability analysis in EU countries: a dynamic macro-panel approach," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 12, pages 219-241, June.
    3. António Afonso & José Carlos Coelho, 2023. "Drivers of Fiscal Sustainability: a Time-Varying Analysis for Portugal," Working Papers REM 2023/0287, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

    More about this item

    Keywords

    Fiscal policy; Smooth time-varying multicointegration; Stock-flow analysis; Sustainability; Chebyshev time-polynomial;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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