Ozlem Goktas () (Istanbul University Faculty of Economics Department of Econometrics)
Abstract
Economic sustainability is consequent to the sustainability of budget policies. By analyzing sustainability of budget policies, it is possible to ascertain if any change in fiscal and monetary policy is necessary or not. In this study, budget deficit sustainability was researched for the period of 1987:1–2007:3 under Inter-temporal Borrowing Constraint (IBC) approach. It is presumed that, crisis occurred and measures taken within the mentioned period caused structural change. Therefore, firstly by using Bai-Perron multiple break tests, a break was determined in the period 2003:2. Sustainability of budget deficit was analyzed for the whole period and two sub-periods respectively. Ng-Perron test for unit roots and Stock-Watson and Shin DOLS tests of cointegration were used in this analysis. Consequently, the results support the weak sustainability for the whole period and also for sub-periods.
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Volume (Year): 8 (2008) Issue (Month): 1 (December) Pages: 45-64 Download reference. The following formats are available: HTML
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