Fiscal policy sustainability: test of intertemporal borrowing constraints


Kalyoncu W.

APPLIED ECONOMICS LETTERS, cilt.12, ss.957-962, 2005 (SSCI İndekslerine Giren Dergi) identifier identifier

  • Cilt numarası: 12 Konu: 15
  • Basım Tarihi: 2005
  • Doi Numarası: 10.1080/13504850500119104
  • Dergi Adı: APPLIED ECONOMICS LETTERS
  • Sayfa Sayıları: ss.957-962

Özet

This paper examines sustainability of the fiscal stances of South Korea, Mexico, the Philippines, South Africa and Turkey. Using the usual intertemporal borrowing constraint, we have tested for a long-run relationship between revenue and expenditure plus interest payments. In our empirical analysis of the sustainability of fiscal stances, cointegration approaches have been used. Empirical results suggest that there exists a unique long-run or equilibrium relationship among variables for South Korea and Turkey. The cointegration results suggest that the Turkish and South Korean fiscal stances satisfy the weak sustainability condition. In the case of Mexico, the Philippines and South Africa cointegration results suggest that in these Countries the fiscal stance is not sustainable (and violates their intertemporal budget constraints) in the long run.