This paper aims to analyze the nexus between disaggregated public spending and GDP in the Euro Area for the period 1990-2010 at a disaggregated level, using a time series approach. We estimated this nexus for ten items of public spending according to the COFOG functional classification. Taking...

During recent years, large trade- and budget deficits have accumulated especially in advanced economies. This study examines if this coincidence actually reflects a causal relation. Economic theory and previously documented findings on causality between trade and government balances are...

This paper shows that there is the weak “Globally” Ricardian rules that sustains the sustainability of the government debt in the sense that it binds intertemporal government budget constraint. And we compare our result with the former paper about testing the government debt sustainability....

We employed Fincke and Greiner's (2011, Studies in Nonlinear Dynamics & Econometrics) approach for testing sustainability of public debt in the case of India. Their approach was based on the framework of Bohn (1998) who showed how the primary surplus reacts to variations in debt and which has...

The purpose of this paper is to investigate whether efforts to eliminate the budget deficits in Portugal, Ireland, Italy, Greece and Spain, as it has been suggested by Troika (European Commission, International Monetary Fund, and European Central Bank), will delay the economic growth of these...

This paper elaborates on the relationship between sustainability of public debt and the debt to GDP ratio in case the interest rate on public debt exceeds the growth rate of GDP. When the primary surplus relative to GDP positively reacts to a higher debt to GDP ratio, a bounded debt to GDP ratio...

Barro's model is an AK model, and there cannot be dynamic inefficiency since the social yield of the capital is higher than the growth rate. But it may be that the private yield and thus the interest rate are lower than the growth rate. One can thus have a Ponzi game and the government can allow...

Testing the reaction of the primary surplus to variations in public debt, relative to GDP respectively, has been frequently resorted to in order to test for sustainability of a given debt policy. In this contribution, we analyze theoretically under which condition a positive reaction of the...

According to Keynesian economics wisdom, government debt has an effect on the economy since consumers see government debt as net wealth. However, according to the debt neutrality hypothesis of Ricardo (1817), popularised by Barro (1974), such effects would be absent. This paper's results,...

The study investigates the linear and nonlinear causal linkages between the tax-spend nexus in Nigeria for the periods 1961-1992, 1993-2012 and1961-2012. Employing a nonparametric causality test of Diks and Panchenko (2006) as well as the parametric causality test using the VAR model, results...