Budget Deficits Sustainable? An Empirical Analysis for OECD Countries ★

In this study, budget deficit sustainability in OECD countries, are investigated via intertemporal budget constraint approach in 1980-2012 periods and quarterly data used. In analysis firstly, Cross Sectionally Dependency (CD) in country was examined CDLM test (Cross Sectionally Dependency Lagrange Multiplier) developed by Pesaran (2004), . Stationary of series was searched CADF test (Cross-Sectionally Augmented Dickey-Fuller) developed by Pesaran (2006), considering CD. Cointegration relationship among series was examined panel cointegration test with multiple structural breaks developed by Basher and Westerlund (2009). As a result of analysis, cointegration relationship between the series was determined. According to the long- run analysis, budget deficits of these countries are sustainable in weak form.