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Fiscal Solvency and Fiscal Forecasting in Europe

  • Artis, Michael J
  • Marcellino, Massimiliano

This paper analyses two features of concern to policy-makers in the countries of the prospective European Monetary Union: the solvency of their government’s finances; and the accuracy of fiscal forecasts. Extending the existing methodology of solvency tests, the paper finds that, with few exceptions, EU governments are insolvent, albeit debt/GDP ratios show signs of stabilizing. The accuracy of official short-term fiscal forecasts (those of the OECD) is analysed, using conventional techniques, and found to be reassuring.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1836.

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Date of creation: Mar 1998
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Handle: RePEc:cpr:ceprdp:1836
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  1. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
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  12. Ahmed, S. & Rogers, J.H., 1993. "Government Budget Deficits and Trade Deficits: Are Present Value Constraints Satisfied in Long-Term Data?," Papers 5-93-6, Pennsylvania State - Department of Economics.
  13. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
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  24. David W. Wilcox, 1987. "The substainability of government deficits: implications of the present- value borrowing constraint," Working Paper Series / Economic Activity Section 77, Board of Governors of the Federal Reserve System (U.S.).
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  27. Clements, Michael P. & Hendry, David F., 2006. "Forecasting with Breaks," Handbook of Economic Forecasting, Elsevier.
  28. Tanaka, Katsuto, 1990. "Testing for a Moving Average Unit Root," Econometric Theory, Cambridge University Press, vol. 6(04), pages 433-444, December.
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