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The relationship between debt level and fiscal sustainability in OECD countries

Listed author(s):
  • Mariam Camarero

    (Jaume I University)

  • Josep Lluís Carrion-i-Silvestre

    (University of Barcelona)

  • Cecilio Tamarit

    (University of Valencia)

In this paper we unify the traditional approaches to testing for s- cal sustainability considering the stock-ow system that scal variables con gure. Our approach encompasses previous ways of testing for sus- tainability. The results obtained for a group of 17 OECD countries point to weak scal sustainability, as well as to the existence of cointegration between de cit and debt, con rming the relevance of the stock-ow ap- proach. Allowing for structural breaks and multicointegration turns out to be of critical importance to assess whether the scal authorities apply their policies looking for sustainability and whether, simultaneously, they try to stabilize real debt target levels.

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File URL: ftp://147.156.210.157/RePEc/pdf/eec_1402.pdf
File Function: First version, 2014
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Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1402.

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Length: 44 pages
Date of creation: Apr 2014
Handle: RePEc:eec:wpaper:1402
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