Panel Cointegration Tests on the Fiscal Sustainability of German Laender
26 Pages Posted: 16 Sep 2014
Date Written: August 15, 2014
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.
Keywords: fiscal sustainability, federalism, unit root, panel cointegration
JEL Classification: H620, H770, H720
Suggested Citation: Suggested Citation
Burret, Heiko and Feld, Lars P. and Koehler, Ekkehard A., Panel Cointegration Tests on the Fiscal Sustainability of German Laender (August 15, 2014). CESifo Working Paper Series No. 4929, Available at SSRN: https://ssrn.com/abstract=2496332 or http://dx.doi.org/10.2139/ssrn.2496332
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