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Government Solvency or just Pseudo-Sustainability? a Long-Run Multicointegration Approach for Spain

Author

Listed:
  • Regina Escario

    (Applied Economics Department. University of Zaragoza)

  • María Dolores Gadea

    (Applied Economics Department. University of Zaragoza)

  • Marcela Sabaté

    (Applied Economics Department. University of Zaragoza)

Abstract

The concept of multicointegration allows to test the sustainability of public finances by assessing dynamic equilibrium relationships between flow and stock variables. This paper focus on the very long-run Spanish case, characterized by the more or less intensive use of monetization to offset the recurrent deficits. The results support that seigniorage allowed the governments to guarantee –even artificially– a pseudo-sustainability for their budgetary path. Besides, the possibility of there being a structural break during the period is also taken into account.

Suggested Citation

  • Regina Escario & María Dolores Gadea & Marcela Sabaté, 2009. "Government Solvency or just Pseudo-Sustainability? a Long-Run Multicointegration Approach for Spain," Documentos de Trabajo dt2009-07, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  • Handle: RePEc:zar:wpaper:dt2009-07
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    File URL: http://www.dteconz.unizar.es/DT2009-07.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    deficit; seigniorage; sustainability; multicointegration;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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