Fiscal Multicointegration and Sustainability in OECD Economies

Abstract

Policies surrounding government expenditures and revenues are often concerned with the size of the national public debt and whether it is sustainable or not. In this paper, the recent fiscal trends of 14 OECD nations are assessed as sustainable or unsustainable by employing the multicointegration framework and asserting corresponding criteria for sustainability. Denmark, Norway, Finland, Canada, Sweden, Portugal, and Austria are found to exhibit sustainable fiscal policies during the paper’s sample period, whereas the policies of the United States, Italy, France, Netherlands, United Kingdom, Spain, and Japan are determined to be unsustainable.