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National Insolvency: A Test of the US Intertemporal Budget Constraint

Author

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  • Uctum, Merih
  • Wickens, Michael R.

Abstract

If a nation fails to satisfy its intertemporal budget constraint (IBC) then, like a government or a household, either it will become insolvent or it can consume more of its income. The main purpose of this paper is to establish necessary and sufficient conditions for a nation to satisfy its IBC, and to use these to carry out a test of whether the United States is violating its IBC. After suitable modifications the techniques used in the literature in testing the government IBC can be used; for example, the balance of payments replaces the government budget constraint. The analysis provides a number of new results and generalizations of existing results.

Suggested Citation

  • Uctum, Merih & Wickens, Michael R., 1990. "National Insolvency: A Test of the US Intertemporal Budget Constraint," CEPR Discussion Papers 437, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:437
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    Cited by:

    1. Kumar, Saten, 2015. "Regional integration, capital mobility and financial intermediation revisited: Application of general to specific method in panel data," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 36(C), pages 1-17.
    2. Bineau, Yannick, 2010. "Une méta-analyse des études sur la mesure de la mobilité internationale du capital selon la méthode de Feldstein et Horioka," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(2), pages 227-272, juin.

    More about this item

    Keywords

    Balance of Payments; Budget Constraint; Government Spending;

    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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