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The Behaviour of US and UK Public Debt: Further Evidence Based on Time Varying Parameters

Journal Transition Studies Review

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Title The Behaviour of US and UK Public Debt: Further Evidence Based on Time Varying Parameters
 
Creator Tiwari, Aviral K.
Bolat, Suleyman
Mutascu, Mihai
 
Subject —
Public debt; Budget deficit; Time varying parameter; Intertemporal constraint; Sustainability
C22 - E62 - H63
 
Description The paper investigates whether US and UK have followed sustainable debt policies during the period 1970-2012, by exploring the reaction of the primary surplus as percentage of GDP to variations in the debt to GDP ratio, as a powerful test. The main results reveal that the coefficient for UK is negative and significant, while for the US, we are unable to find a clear-cut evidence of the sustainability of public debt as the coefficient is also negative, but insignificant. In the case of the UK, the outputs reveal that government did not raise the primary surplus as the government debt increased rather reduced it and this reduction has been significant. On the other hand, the significance of the reaction coefficient demonstrates that the reaction of the primary surplus to increases in public debt varies over time.All these evidences allow us to appreciate that the fiscal policy in the UK is not sustainable in the sense of satisfying of intertemporal budgetary constrain.
 
Publisher Journal Transition Studies Review
 
Contributor —
 
Date 2016-06-24
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://transitionacademiapress.org/jtsr/article/view/116
10.14665/1614-4007-23-1-002
 
Source Journal Transition Studies Review; Vol 23, No 1 (2016); 11-19
1614-4015
1614-4007
 
Language eng
 
Relation http://transitionacademiapress.org/jtsr/article/view/116/74
 
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