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Fiscal Policy in Sweden: Effects of EMU Criteria Convergence


  • Hatemi-J, Abdulnasser

    (Department of Economics, Lund University)


This paper investigates the sustainability of fiscal policy in Sweden performed during the period 1963:01-1997:04. On the basis of Johansen's VAR and the augmented Granger causality tests, the results show that taxes and spending are causally related in the long-run and the homogeneity condition is supported empirically. The effect of EMU criteria convergence on fiscal policy is also investigated empirically. “Pantula principle” is applied for determining the form of deterministic trend component. Special attention is given to the lag-choosing process.

Suggested Citation

  • Hatemi-J, Abdulnasser, 1999. "Fiscal Policy in Sweden: Effects of EMU Criteria Convergence," Working Papers 1999:5, Lund University, Department of Economics, revised Nov 1999.
  • Handle: RePEc:hhs:lunewp:1999_005

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    References listed on IDEAS

    1. Hoover, Kevin D & Sheffrin, Steven M, 1992. "Causation, Spending, and Taxes: Sand in the Sandbox or Tax Collector for the Welfare State?," American Economic Review, American Economic Association, vol. 82(1), pages 225-248, March.
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    Cited by:

    1. Hjelm, Goran & Johansson, Martin W., 2005. "A Monte Carlo study on the pitfalls in determining deterministic components in cointegrating models," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 691-703, December.
    2. Afonso, António & Agnello, Luca & Furceri, Davide & Sousa, Ricardo M., 2011. "Assessing long-term fiscal developments: A new approach," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 130-146, February.
    3. Samuel S Jibao & Niek Schoeman & Ruthira Naraidoo, 2010. "Fiscal Regime Changes and the Sustainability of Fiscal Imbalance in South Africa: A Smooth Transition Error-Correction Approach," Working Papers 201023, University of Pretoria, Department of Economics.
    4. Baharumshah, Ahmad Zubaidi & Lau, Evan, 2007. "Regime changes and the sustainability of fiscal imbalance in East Asian countries," Economic Modelling, Elsevier, vol. 24(6), pages 878-894, November.
    5. Venus Khim-Sen Liew & Tuck Cheong Tang, 2010. "An empirical investigation of purchasing power parity for a transition economy - Cambodia," Economics Bulletin, AccessEcon, vol. 30(2), pages 1025-1031.
    6. Amir Kia & Norman Gardner, 2009. "Analyzing the Fiscal Process under a Stochastic Environment: Evidence from Egypt," Working Papers 475, Economic Research Forum, revised Mar 2009.
    7. Miyazaki, Tomomi, 2014. "Fiscal reform and fiscal sustainability: Evidence from Australia and Sweden," International Review of Economics & Finance, Elsevier, vol. 33(C), pages 141-151.
    8. Evan Lau & Ahmad Zubaidi Baharumshah, 2005. "Assessing The Mean Reversion Behavior Of Fiscal Policy: The Case Of Asian Countries," Macroeconomics 0504002, EconWPA.
    9. António Afonso & João Tovar Jalles, 2012. "Revisiting fiscal sustainability: panel cointegration and structural breaks in OECD countries," Working Papers Department of Economics 2012/29, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    10. Bogdan Dima & Oana Lobont & Cristina Nicolescu, 2009. "The Fiscal Revenues And Public Expenditures: Is Their Evolution Sustenable? The Romanian Case," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-42.
    11. António Afonso & João Jalles, 2014. "A longer-run perspective on fiscal sustainability," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 821-847, November.
    12. António Afonso, 2005. "Fiscal Sustainability: The Unpleasant European Case," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 1-19, March.
    13. Ahmad Zubaidi Baharumshah & Evan Lau, 2010. "Mean Reversion Of The Fiscal Conduct In 24 Developing Countries," Manchester School, University of Manchester, vol. 78(4), pages 302-325, July.
    14. Amir Kia, 2005. "Sustainability of the Fiscal Process in Developing Countries- Egypt, Iran and Turkey: A Multicointegration Approach – revised version: Fiscal Sustainability in Emerging Countries: Evidence from Iran a," Carleton Economic Papers 05-08, Carleton University, Department of Economics, revised Nov 2008.
    15. Amir KIA, "undated". "Analyzing the Fiscal Process Under a Stochastic Environment: Evidence From Egypt," EcoMod2009 21500053, EcoMod.
    16. Hjelm, Göran & Johansson, Martin W, 2002. "A Monte Carlo Study on the Pitfalls in Determining Deterministic Components in Cointegrating Models," Working Papers 2002:3, Lund University, Department of Economics.

    More about this item


    Spending; revenue; Granger causality; cointegration; Johansen's VAR; EMU;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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