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Government Solvency: Revisiting some EMU Countries Author info | Abstract | Publisher info | Download info | Related research | Statistics Arghyrou, Michael G (Brunel University)
Kul B Luintel
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Corsetti and Roubini (1991) reported that the government finances of Greece, Ireland, Italy and the Netherlands (now all EMU countries) did not satisfy the intertemporal budget constraint (IBC). We re-examine this issue by utilizing a new empirical approach and extended data set. Structural shifts, an issue which Corsetti and Roubini were unable to address due to the lack of suitable econometric methods, are tackled. We find that: (i) multiple structural shifts, most of which correspond to important policy changes, did occur in the fiscal path of these countries; (ii) the effect of the majority of structural shifts has been to strengthen the evidence supporting IBC; and (iii) government finances of all four countries satisfy the IBC and this finding is robust to different time horizons. We also find a clear positive Maastricht effect on IBC for all countries.
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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number
8.
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Date of creation: 04 Jun 2003Date of revision:
Handle: RePEc:ecj:ac2003:8Contact details of provider: Web page: http://www.res.org.uk/society/annualconf.asp More information through EDIRC
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Keywords: intertemporal budget constraints ; strong and weak form sustainability ; structural breaks ; Other versions of this item:
Article Paper Michael G. Arghyrou & Kul B Luintel, 2002.
"Government Solvency: Revisiting some EMU Countries ,"
Economics and Finance Discussion Papers
02-24, Economics and Finance Section, School of Social Sciences, Brunel University.
[Downloadable!] Michael G. Arghyrou & Kul B Luintel, 2002.
"Government Solvency: Revisiting some EMU Countries ,"
Public Policy Discussion Papers
02-24, Economics and Finance Section, School of Social Sciences, Brunel University.
[Downloadable!] Find related papers by JEL classification: E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative
This paper has been announced in the following NEP Reports :
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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"Public Debt Management & Fiscal Sustainability in Italy ,"
AIUB Bus Econ Working Paper Series
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200702, University of Barcelona, Research Institute of Applied Economics, revised Jan 2007.
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