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Fiscal Sustainability in Cross-Dependent Panels: Evidence from the German L nder

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  • Köhler, Ekkehard

Abstract

This paper provides new evidence on the sustainability of public finances in German states (Laender) by exploiting a newly compiled database covering the years 1950-2011. Unlike previous studies on Germany, we analyze fiscal sustainability by applying second generation panel cointegration techniques. A unique identification strategy for the selection of sub-panels improves the robustness of panel cointegration tests and reveals that Laender finances are hardly sustainable.

Suggested Citation

  • Köhler, Ekkehard, 2015. "Fiscal Sustainability in Cross-Dependent Panels: Evidence from the German L nder," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113104, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:113104
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    More about this item

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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