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Structural breaks and nonlinearity in US and UK public debts

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  • Fredj Jawadi
  • Ricardo M. Sousa

Abstract

This article investigates the short-term dynamics of public debts in the United States and the United Kingdom over more than four decades. We check for structural changes in the data and assess nonlinearity and switching-regime hypotheses using several linearity tests. Our findings point to multiple structural breaks due to economic downturns, oil shocks and financial and political instability. We also identify different regimes for which the adjustment is asymmetric and nonlinear, in particular, since 2003 and around the Great Recession.

Suggested Citation

  • Fredj Jawadi & Ricardo M. Sousa, 2013. "Structural breaks and nonlinearity in US and UK public debts," Applied Economics Letters, Taylor & Francis Journals, vol. 20(7), pages 653-657, May.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:7:p:653-657
    DOI: 10.1080/13504851.2012.727967
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    Cited by:

    1. Gnegne, Yacouba & Jawadi, Fredj, 2013. "Boundedness and nonlinearities in public debt dynamics: A TAR assessment," Economic Modelling, Elsevier, vol. 34(C), pages 154-160.
    2. ADAM, Alexandra, 2015. "Approaches Of Public Finance Sustainability Taking Into Account The Current Economic Context," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 19(1), pages 93-101.
    3. Cooray, Arusha & Paradiso, Antonio & Truglia, Francesco Giovanni, 2013. "Do countries belonging to the same region suggest the same growth enhancing variables? Evidence from selected South Asian countries," Economic Modelling, Elsevier, vol. 33(C), pages 772-779.
    4. Abderrahim Chibi & Sidi Mohamed Chekouri & Mohamed Benbouziane, 2019. "The dynamics of fiscal policy in Algeria: sustainability and structural change," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-27, December.
    5. Muteba Mwamba, John W. & Hammoudeh, Shawkat & Gupta, Rangan, 2017. "Financial tail risks in conventional and Islamic stock markets: A comparative analysis," Pacific-Basin Finance Journal, Elsevier, vol. 42(C), pages 60-82.

    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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