Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Have Public Finances in the OECD Area Been Sustainable?

Have Public Finances in the OECD Area Been Sustainable? AbstractThe aim of this article is to test, from an empirical standpoint, the existence of sustainable public finances in the Organisation for Economic Co-operation and Development (OECD) area as a whole, over the most recent period of the world economy, 1973-2016. The research methods include not only standard stationarity tests, but also tests, which allow for a structural break. The relevant results of this research are a stationary public budget balance expressed as a percentage of GDP and a debt to GDP ratio that is stationary in first differences. According to the literature, this means that a “necessary and sufficient” condition is fulfilled for proving the existence of a strong sustainability. We hope this research can make a valuable contribution to the debate regarding public finances in the world economy. To obtain other relevant conclusions, additional tests will need to be performed in the future in order to assess which members are contributing to the fiscal sustainability of the OECD aggregate. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics and Business de Gruyter

Have Public Finances in the OECD Area Been Sustainable?

Ferraz, Ricardo
Economics and Business , Volume 32 (1): 15 – Mar 1, 2018
Download PDF
15 pages

Loading next page...
 
/lp/degruyter/have-public-finances-in-the-oecd-area-been-sustainable-NfQZrsYi9x
Publisher
de Gruyter
Copyright
© 2018 Ricardo Ferraz, published by Sciendo
ISSN
2256-0394
eISSN
2256-0394
DOI
10.1515/eb-2018-0003
Publisher site
See Article on Publisher Site

Abstract

AbstractThe aim of this article is to test, from an empirical standpoint, the existence of sustainable public finances in the Organisation for Economic Co-operation and Development (OECD) area as a whole, over the most recent period of the world economy, 1973-2016. The research methods include not only standard stationarity tests, but also tests, which allow for a structural break. The relevant results of this research are a stationary public budget balance expressed as a percentage of GDP and a debt to GDP ratio that is stationary in first differences. According to the literature, this means that a “necessary and sufficient” condition is fulfilled for proving the existence of a strong sustainability. We hope this research can make a valuable contribution to the debate regarding public finances in the world economy. To obtain other relevant conclusions, additional tests will need to be performed in the future in order to assess which members are contributing to the fiscal sustainability of the OECD aggregate.

Journal

Economics and Business – de Gruyter

Published: Mar 1, 2018

References

  • European Central Bank Ensuring fiscal sustainability in the Euro Area Monthly Newsletter European Central Bank Retrieved from https www ecb europa eu pub pdf other art mb en pp en pdf a fa
    April
  • Testing the null hypothesis of stationarity against the alternative of a unit root of https org
    Kwiatkowski
  • Assessing Fiscal Sustainability in Theory and Practice International Monetary Fund Working Paper https org
    Chalk
  • Commission Communication from the Commission to the European Council European Recovery Plan COM final European Commission Retrieved from http ec europa eu economy finance publications pages publication en pdf
  • BP Crude Oil Prices Retrieved from British Petroleum database http www bp com en global corporate energy economics statistical review of world energy
    April
  • World Economic General government gross debt percent of GDP International Monetary Fund Retrieved from http www imf org external datamapper GGXWDG NGDP WEO year
    April
  • Learning from adversity : policy responses to two oil shocks Essays in Retrieved from https www princeton edu ies IES Essays
    Black
  • Resource prices and macroeconomic policies : Lessons from two oil price shocks OECD Retrieved from http www oecd org eco outlook pdf
    Llewellyn
  • Distribution of the estimators for time series regressions with a unit root of the https org
    Dickey
  • The great financial crisis in Finland and Sweden - The dynamics of boom bust and recovery Directorate General for Economic and Financial Affairs European Commission Economic Retrieved from http ec europa eu economy finance publications pages publication en
    Jonung
  • The Great Crash the Oil Price Shock and the Unit Root Hypothesis https dx org
    Perron
  • Commission Economic Crisis in Europe Causes Consequences Responses European Commission Retrieved from http ec europa eu economy finance publications pages publication en pdf
  • version Retrieved from http www eviews com
    Eviews
  • Schwert Tests for unit roots Monte Carlo investigation of https org
  • Data on GDP Retrieved from database Retrieved from http data worldbank org indicator NY GDP MKTP
    April
  • Revisiting fiscal sustainability - Panel cointegration and structural breaks in OECD countries European Central Bank - Working Paper Series https org
    Afonso
  • Monitoring the OECD
    Maddison
  • The millennial perspective Paris OECD http org
    Maddison
  • Sustainability of the deficit process with structural shifts of https org
    Quintos
  • finanças públicas
    Pereira
  • Is the budget deficit too large https org
    Hakkio
  • OECD Annual Data on Public Finances Retrieved from OECD Economic Outlook Statistics No Retrieved from https stats oecd org index aspx DataSetCode EO
    June
  • The sustainability of Fiscal Policy : New Answers to an Old Question OECD Retrieved from http www oecd org eco outlook
    Blanchard
  • Lessons for today from Sweden s crisis in the Ministère de l des Finances et Ministère du Commerce Retrieved from https www tresor economie gouv fr Ressources File
    Chabert
  • European Commission European Semester Thematic Factsheet Sustainability of Public Finances European Commission Retrieved from https ec europa eu info sites info files european semester thematic factsheet public finance sustainability en pdf
  • Testing intertemporal budget constraints : theory and applications to federal budget and current account deficits of and https org
    Trehan
  • Data on Public Finances Retrieved from database http ec europa eu economy finance ameco
    AMECO
  • Testing for a Unit Root in Time Series Regression https org
    Phillips