Should We Care for Structural Breaks When Assessing Fiscal Sustainability?

13 Pages Posted: 11 Feb 2008

See all articles by Antonio Afonso

Antonio Afonso

affiliation not provided to SSRN

Christophe Rault

IZA Institute of Labor Economics; University of Orleans; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 2007

Abstract

We apply recent panel cointegration methods to a structural equation between government expenditure and revenue. Allowing for multiple endogenous breaks and after computing appropriate bootstrap critical values, we conclude for fiscal sustainability in the overall EU15 pane.

Keywords: fiscal sustainability, EU, panel cointegration

JEL Classification: C23, E62, H62

Suggested Citation

Afonso, Antonio and Rault, Christophe and Rault, Christophe, Should We Care for Structural Breaks When Assessing Fiscal Sustainability? (November 2007). William Davidson Institute Working Paper No. 902, Available at SSRN: https://ssrn.com/abstract=1090606 or http://dx.doi.org/10.2139/ssrn.1090606

Antonio Afonso (Contact Author)

affiliation not provided to SSRN ( email )

Christophe Rault

University of Orleans ( email )

Rue de Blois
BP 6739
LEO, Orleans, Orleans cedex 2 45067
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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