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

  • Francisco de Castro

    (Banco de España)

  • José M. González-Páramo

    (Universidad Complutense de Madrid)

  • Pablo Hernández de Cos

    (Banco de España)

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.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/01/Fic/dt0103e.pdf
File Function: First version, 2001
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Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0103.

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Length: 40 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:bde:wpaper:0103
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