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UK Debt Sustainability: Some Nonlinear Evidence and Theoretical Implications

Listed author(s):
  • John Considine

    (University College Cork)

  • Liam A. Gallagher

    (Dublin City University)

In this paper we assess whether the UK public finances were sustainable for the period 1919-2001. A robust test of sustainability is presented using a nonlinear representation of the debt-GDP ratio. Empirical evidence supports debt sustainability. Moreover, the exponential smooth transition autoregressive representation is evidence that sustainability is the result of active debt management rather than tax smoothing. The results strongly support the active debt management hypothesis for the UK. Copyright © 2008 The Authors.

(This abstract was borrowed from another version of this item.)

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File URL: http://repec.org/mmfc04/59.pdf
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Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2004 with number 59.

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Date of creation: 17 Sep 2004
Handle: RePEc:mmf:mmfc04:59
Contact details of provider: Web page: http://www.essex.ac.uk/afm/mmf/index.html

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  10. Wilcox, David W, 1989. "The Sustainability of Government Deficits: Implications of the Present-Value Borrowing Constraint," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(3), pages 291-306, August.
  11. Ohanian, Lee E, 1997. "The Macroeconomic Effects of War Finance in the United States: World War II and the Korean War," American Economic Review, American Economic Association, vol. 87(1), pages 23-40, March.
  12. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1995. "Restoring generational balance in U.S. fiscal policy: what will it take?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 2-12.
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  14. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
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