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On the sustainability of the Spanish public budget performance

Listed author(s):
  • FRANCISCO DE CASTRO

    (Banco de España y Universidad Complutense de Madrid)

  • PABLO HERNÁNDEZ DE COS

    (Banco de España)

In this paper, we address the issue of whether the current fiscal policy in Spain is sustainable. For this purpose we apply traditional empirical tests of fiscal sustainability proposed in the literature and, in addition, we introduce a deeper univariate analysis of the series involved. Our results show that a structural break seems to have taken place gradually in the Spanish budget performance, allowing to verifying the intertemporal borrowing constraint in a «strong sense», which means that no problems in marketing public debt are expected to arise if fiscal variables follow the pattern of the past in the future. Classification-JEL : E60, F41,

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Article provided by IEF in its journal Hacienda Pública Española/Revista de Economía Pública.

Volume (Year): 160 (2002)
Issue (Month): 1 (march)
Pages: 9-28

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Handle: RePEc:hpe:journl:y:2002:v:160:i:1:p:9-28
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  9. Wickens, M. R. & Uctum, Merih, 1993. "The sustainability of current account deficits : A test of the US intertemporal budget constraint," Journal of Economic Dynamics and Control, Elsevier, vol. 17(3), pages 423-441, May.
  10. Haug, Alfred A, 1991. "Cointegration and Government Borrowing Constraints: Evidence for the United States," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(1), pages 97-101, January.
  11. Anindya Banerjee & Robin L. Lumsdaine & James H. Stock, 1990. "Recursive and Sequential Tests of the Unit Root and Trend Break Hypothesis: Theory and International Evidence," NBER Working Papers 3510, National Bureau of Economic Research, Inc.
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