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Structual Break: Tests of the Present-Value Government Borrowing Constraint and Stability of Debt-GDP Ratio in the UK: 1970-2000


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  • Ghatak A.
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    In this paper we argue that allowance for structural breaks (Perron, 1989, Zivot and Andrews, 1992) in the relevant time–series can provide more accurate tests of the present–value borrowing constraint (Hamilton and Flavin, 1986) by accommodating any changes in the processes generating budget deficits and alterations in fiscal policies. Our results confirm that the UK government has satisfied the present value constraint during the period 1992–2000.

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    Bibliographic Info

    Article provided by European Research Studies Journal in its journal European Research Studies Journal.

    Volume (Year): IV (2001)
    Issue (Month): 3-4 (July - December)
    Pages: 37-54

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    Handle: RePEc:ers:journl:v:iv:y:2001:i:3-4:p:37-54

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    Related research

    Keywords: Hamilton and Flavin Stationarity; Structural Breaks; Cointegration Stability Perron Zivot and Andrews;

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