Search results for "intertemporal solvency"

showing 2 items of 2 documents

Testing for Government Intertemporal Solvency: A Smooth Transition Error Correction Model Approach

2001

Applied macroeconomists have tested for the government intertemporal solvency condition by either testing for linear stationarity in the total government deficit series or testing for linear cointegration between total government spending and total tax revenues. A number of authors have focused, in particular, on structural breaks in the government deficit process. In this paper, we use a smooth transition error correction model to test and estimate a shift in the adjustment toward a linear cointegration relationship between the government spending to output ratio and the total tax revenues to output ratio. Estimation results show that government authorities react only to large (in absolute…

Government spendingMacroeconomicsEstimationEconomics and EconometricsSolvencyCointegrationResidualnon linear time seriesintertemporal solvency smooth transitionError correction modelGovernment (linguistics)Tax revenuegovernment solvency; non linear time seriesEconometricsEconomicsgovernment solvency
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Threshold Effects in the U.S. Budget Deficit. ECONOMIC INQUIRY

2004

We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic policy makers will only intervene to reduce per capita deficit when it reaches a certain threshold.

intertemporal solvencythreshold cointegration
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