Multicointegration and sustainability of fiscal practices
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Using multicointegration methodology, we develop criteria for testing sustainability of fiscal budgeting processes across all states of nature. Criteria are derived from the optimal control literature where levels and rates of change of a system of variables are determinants of policy response. The appropriate policy response mechanisms are outlined and linked to the multicointegration methodology. We then test government spending and revenue systems of 15 industrialized countries for the presence of such mechanisms. We find that only Norway and the United Kingdom exhibit policy responses that are consistent with our criteria. © Western Economic Association International.
Published Version (Please cite this version)10.1093/ei/cbi031
Publication InfoLeachman, L; Bester, A; Rosas, G; & Lange, P (2005). Multicointegration and sustainability of fiscal practices. Economic Inquiry, 43(2). pp. 454-466. 10.1093/ei/cbi031. Retrieved from https://hdl.handle.net/10161/2076.
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Professor Emeritus of Political Science
Professor of Political Science and Public Policy and former Provost (1999-2014) and Chair of the Political Science department (1996-1999). His principal interests are global higher education, comparative politics and political economy and twentieth century European politics. In addition to numerous articles, he is the author of Union Democracy and Liberal Corporatism: Exit, Voice and Wage Regulation in Postwar Europe, co-author of Unions, Change and Crisis: French and Italian Union Strategy and
Professor of the Practice of Economics
Professor Leachman is interested in studying the subjects of international trade, exchange rates, fiscal policy, and international macroeconomics. In conducting her research, she often incorporates intertemporal models, multicointegration and sustainability. Her current research project explores the political economy of intertemporal budgeting. She recently collaborated with G Rosas, A Bester, and P. Lange to complete a study on, “The Political Economy of Budget Deficits,” and worked
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