Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5052862 | Economic Analysis and Policy | 2010 | 8 Pages |
Abstract
The study provides new evidence on the sustainability debate concerning the US budget balance. Existing studies are often only able to reject non-cointegration between government expenditure and revenue once structural breaks or regime changes are allowed for. Using a testing procedure advocated by Bierens, this study provides a different perspective on this issue. Government expenditure and revenue are both found to be stationary around a nonlinear deterministic trend, and they are co-trended insofar as they share a common nonlinear deterministic trend.
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Authors
Mark J. Holmes,