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(Un-)Sustainability of Public Finances in German Laender: A Panel Time Series Approach

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  • Burret, Heiko T.
  • Feld, Lars P.
  • Köhler, Ekkehard A.

Abstract

This paper provides evidence that most German states (Laender) have unsustainable public finances by exploiting a newly compiled database covering the years 1950–2011. Although the Laender are closely intertwined we are the first to apply “second generation” panel techniques that control for correlation among the Laender. A unique identification strategy for the selection of relevant sub-panels improves the robustness of the tests.

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  • Burret, Heiko T. & Feld, Lars P. & Köhler, Ekkehard A., 2016. "(Un-)Sustainability of Public Finances in German Laender: A Panel Time Series Approach," Economic Modelling, Elsevier, vol. 53(C), pages 254-265.
  • Handle: RePEc:eee:ecmode:v:53:y:2016:i:c:p:254-265
    DOI: 10.1016/j.econmod.2015.12.001
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    Cited by:

    1. Feld, Lars P. & Köhler, Ekkehard A. & Wolfinger, Julia, 2018. "Modeling fiscal sustainability in dynamic macro-panels with heterogeneous effects: Evidence from German federal states," Freiburg Discussion Papers on Constitutional Economics 18/05, Walter Eucken Institut e.V..
    2. Feld, Lars P., 2018. "The quest for fiscal rules," Freiburg Discussion Papers on Constitutional Economics 18/09, Walter Eucken Institut e.V..
    3. repec:kap:copoec:v:28:y:2017:i:3:d:10.1007_s10602-017-9240-3 is not listed on IDEAS

    More about this item

    Keywords

    Fiscal sustainability; Federalism; Panel cointegration; Cross dependence;

    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
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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