On the Sustainability of the Spanish Public Budget Performance
Fiscal Sustainability Conference, p. 135, 2000
40 Pages Posted: 17 Jul 2012
Date Written: January 20, 2000
In this paper we attempt to evaluate the sustainability of Spanish fiscal policy, taking as a benchmark the test proposed by Quintos (1995). In this analysis we take into account the possible existence of structural breaks in the cointegration relationship between public revenues and expenditures. A standard analysis would lead us to conclude that the Spanish deficit is only weakly sustainable. However, a deeper analysis of the series involved reveals that the relevant variables show a change in the order of integration that modifies the previous results, leading us to conclude that, according to the public performance of the most recent years, fiscal policy can be considered as strongly sustainable.
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