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Evaluating the dynamics of fiscal policy in Spain: patterns of interdependence and consistency of public expenditure and revenues

Author

Listed:
  • Francisco de Castro

    (Banco de España)

  • José M. González-Páramo

    (Universidad Complutense de Madrid)

  • Pablo Hernández de Cos

    (Banco de España)

Abstract

Two issues are addressed in this paper. First, we attempt to ascertain whether the current fiscal policy in Spain satisfies the intertemporal borrowing constraint. For this purpose, we apply the traditional empirical tests of sustainability proposed in the literature, that pay special attention to integration orders of deficit and debt processes and the existence of cointegration relationships between revenues and expenditures. Under this approach, a sustainable fiscal policy would indicate that if fiscal variables follow the pattern of the past in the future, no problems in marketing public debt are expected to arise.

Suggested Citation

  • Francisco de Castro & José M. González-Páramo & Pablo Hernández de Cos, 2001. "Evaluating the dynamics of fiscal policy in Spain: patterns of interdependence and consistency of public expenditure and revenues," Working Papers 0103, Banco de España.
    • Handle: RePEc:bde:wpaper:0103
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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/01/Fic/dt0103e.pdf
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    Cited by:

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    2. Goyal, Rajan & Khundrakpam, J. K. & Ray, Partha, 2004. "Is India's public finance unsustainable? Or, are the claims exaggerated?," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 401-420, April.
    3. Francisco de Castro & José Manuel González-Páramo & Pablo Hernández de Cos, 2004. "Fiscal consolidation in Spain: dynamic interdependence of public spending and revenues," Investigaciones Economicas, Fundación SEPI, vol. 28(1), pages 193-207, January.

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    More about this item

    Keywords

    fiscal policy; public debt; tests;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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