Intertemporal solvency and breaks in the US deficit process: a maximum-likelihood cointegration approach
AbstractPrevious research has shown that the intertemporal solvency condition is equivalent to the cointegration of either (1) the interest-inclusive government spendings and tax revenue or (2) the interest-exclusive government spendings, tax revenue and government outstanding debt. This note examines the intertemporal solvency condition using a maximum likelihood cointegration test. Results show that the solvency condition for the US government is satisfied only if a break is included in the process.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 2 (1995)
Issue (Month): 7 ()
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