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The relationship between debt level and fiscal sustainability in OECD countries


  • 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.

Suggested Citation

  • Mariam Camarero & Josep Lluís Carrion-i-Silvestre & Cecilio Tamarit, 2014. "The relationship between debt level and fiscal sustainability in OECD countries," Working Papers 1402, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1402

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    References listed on IDEAS

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    Cited by:

    1. António Afonso & João Tovar Jalles, 2016. "The elusive character of fiscal sustainability," Applied Economics, Taylor & Francis Journals, vol. 48(28), pages 2651-2664, June.
    2. repec:eee:ecofin:v:42:y:2017:i:c:p:144-155 is not listed on IDEAS

    More about this item


    fi scal sustainability; cointegration; unit roots; structural breaks;

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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