An Examination of the Sustainability of Indian Fiscal Policy
AbstractIndia has a long history of running fiscal deficits. This paper asks whether the magnitude of these deficits has involved a violation of India's intertemporal budget constraint. Times series evidence on Central government tax revenues and expenditures are examined for cointegration using procedures that are robust in the presence of structural change. We find no evidence of cointegration, a result that implies a violation of intertemporal solvency and that current fiscal policies are unlikely to be sustainable in the long-run.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 748.
Length: 17 pages
Date of creation: 2000
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FISCAL POLICY ; DEBT ; ECONOMIC DEVELOPMENT;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
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