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An Efficient test of Fiscal Sustainability


  • Vasco Gabriel

    (University of Surrey and NIPE-UM, Portugal)

  • Pataaree Sangduan

    (Bureau of Budget, Thailand)


We suggest a multivariate efficient test of the 'strong' fi scal sustainability hypothesis, based on Horvath and Watson's (1995) cointegration test when cointegration vectors are pre-specified. Using data for a set of developed and developing economies, we show that, unlike our procedure, conventional methodologies tend to penalize the sustainability hypothesis.

Suggested Citation

  • Vasco Gabriel & Pataaree Sangduan, 2010. "An Efficient test of Fiscal Sustainability," School of Economics Discussion Papers 1110, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:1110

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    References listed on IDEAS

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    Cited by:

    1. Przemyslaw Wlodarczyk, 2017. "Fiscal sustainability of the Visegrad Group countries in the aftermath of global economic crisis," Lodz Economics Working Papers 2/2017, University of Lodz, Faculty of Economics and Sociology.
    2. Ricardo M. Sousa, 2010. "Collateralizable Wealth, Asset Returns, and Systemic Risk: International Evidence," NIPE Working Papers 15/2010, NIPE - Universidade do Minho.

    More about this item

    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
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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