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Policy regime changes and the long-run sustainability of fiscal policy: an application to Greece

  • Makrydakis, Stelios
  • Tzavalis, Elias
  • Balfoussias, Athanassios

This paper questions the widespead practice of assessing the hypothesis of long-run fiscal policy sustainability by means of conventional unit-root tests that do not allow for the possible impact of regime shifts. Using the Greek economy as a model case, the Zivot- Andrews squential integrability testing procedure which allows for the endogenous determination of possible regime changes is deployed to this end.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 16 (1998)
Issue (Month): 1 (January)
Pages: 71-86

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Handle: RePEc:eee:ecmode:v:16:y:1998:i:1:p:71-86
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  18. Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
  19. Kiviet, Jan F & Phillips, Garry D A, 1992. "Exact Similar Tests for Unit Roots and Cointegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 349-67, August.
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