6533b7d8fe1ef96bd126b63a

RESEARCH PRODUCT

Assessing Long-Term Fiscal Developments: A New Approach

Davide FurceriDavide FurceriAntónio AfonsoRicardo M. SousaRicardo M. SousaLuca Agnello

subject

Government spendingMacroeconomicsFiscal imbalancePublic economics05 social sciencesFiscal unionFiscal policy0502 economics and businessGovernment revenueEconomicsmedia_common.cataloged_instanceFiscal federalism050207 economicsFiscal sustainabilityEuropean union050205 econometrics media_common

description

We use a new approach to assess long-term fiscal developments. By analyzing the time-varying behaviour of the two components of government spending and revenue - responsiveness and persistence - we are able to infer about the sources of fiscal behaviour. Drawing on quarterly data we estimate recursively these components within a system of government revenue and spending equations using a Three-Stage Least Square method. In this way we track fiscal developments, i.e. possible fiscal deteriorations and/or improvements for eight European Union countries plus the US. Results suggest that positions have not significantly changed for Finland, France, Germany, Spain, the United Kingdom and the US, whilst they have improved for Belgium, Italy, and the Netherlands.

yearjournalcountryeditionlanguage
2009-01-01SSRN Electronic Journal
https://doi.org/10.2139/ssrn.1354767