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Sustainability of Italian budgetary policies: a time series analysis (1862-2013)

European Journal of Government and Economics

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Field Value
 
Title Sustainability of Italian budgetary policies: a time series analysis (1862-2013)
 
Creator Brady, Gordon L.
Magazzino, Cosimo
 
Subject public finance; sustainability; ARDL; Italy
C22; H11; H60; O52
 
Description In this paper, we analyze the sustainability of Italian public finances using a unique database covering the period 1862-2013. This paper focuses on empirical tests for the sustainability and solvency of fiscal policies. A necessary but not sufficient condition implies that the growth rate of public debt should in the limit be smaller than the asymptotic rate of interest. In addition, the debt-to-GDP ratio must eventually stabilize at a steady-state level. The results of unit root and stationarity tests show that the variables are non-stationary at levels, but stationary in first-differences form, or I(1). However, some breaks in the series emerge, given internal and external crises (wars, oil shocks, regime changes, institutional reforms). Therefore, the empirical analysis is conducted for the entire period, as well as two sub‐periods (1862‐1913 and 1947‐2013). Moreover, anecdotal evidence and visual inspection of the series confirm our results. Furthermore, we conduct tests on cointegration, which evidence that a long-run relationship between public expenditure and revenues is found only for the first sub-period (1862-1913). In essence, the paper’s results reveal that Italy have sustainability problems in the Republican age.
 
Publisher Europa Grande
 
Contributor —
 
Date 2017-12-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ejge.org/index.php/ejge/article/view/124
 
Source European Journal of Government and Economics; Vol 6, No 2 (2017); 126-145
2254-7088
 
Language eng
 
Relation http://www.ejge.org/index.php/ejge/article/view/124/74
http://www.ejge.org/index.php/ejge/article/downloadSuppFile/124/42
 
Rights Copyright (c) 2017 Cosimo Magazzino
http://creativecommons.org/licenses/by-nc/4.0