Sustainability of Portuguese Fiscal Policy in Historical Perspective
AbstractThis paper analyses the sustainability of Portuguese public finances, making use of a long dataset with more than a full century of observations. The use of such a long dataset is appropriate because both unit root and cointegration tests require a long period of data. The sustainability testing procedure is based on unit root and cointegration tests. We find considerable evidence in favour of sustainability for the 1903-2003 period. The overall conclusion of sustainability for the 1903-2003 period is not maintained for the more recent 1975-2003 period, which is characterised by the largest GDP deficit ratios of our sample. This latter period appears to signal a shift to an unsustainable path in Portuguese fiscal policy. Hence, our results suggest that fiscal consolidation efforts must, in fact, be continued in Portugal.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1399.
Date of creation: 2005
Date of revision:
fiscal sustainability; sustainability of public debt; intertemporal budget constraint; government deficits and debt; Portugal;
Other versions of this item:
- Carlos José Fonseca Marinheiro, 2005. "Sustainability of Portuguese Fiscal Policy in Historical Perspective," Working Papers de Economia (Economics Working Papers) 32, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
- Carlos Marinheiro, 2005. "Sustainability of Portuguese Fiscal Policy in Historical Perspective," GEMF Working Papers 2005-01, GEMF - Faculdade de Economia, Universidade de Coimbra.
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-20 (All new papers)
- NEP-HIS-2005-02-20 (Business, Economic & Financial History)
- NEP-MAC-2005-02-20 (Macroeconomics)
- NEP-PBE-2005-02-20 (Public Economics)
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