30 research outputs found
Assessing Ricardian equivalence for the New Member States: Does debt-neutrality matter?
No full textRicardian equivalence Infinite horizons Liquidity constraints Government budget constraint Fiscal policy
Optimal taxation and budget deficits: Evidence for the EU's New Member States
No full textThe tax smoothing hypothesis (TSH) is tested for the New Member States of the European Union. Our results show that the TSH holds for five countries, the introduction of the Maastricht 3%-deficit rule, however, had very little effect with regard to the validity of the TSH.Tax smoothing, Government budget constraint, Fiscal rule, Cointegration
Military Spending and Development
No full textThis paper considers the link between arms spending and economic growth for developing countries, in particular whether high spending on arms is likely to have a negative effect on economic growth and what benefits that might be gained by reducing it. The literature is complex and difficult to summarize, with studies differing theoretically, in the empirical methods they use, in the coverage of countries and time series, and in their quality and significance. Nevertheless, the paper argues that the empirical analyses suggests that there is little or no evidence for a positive effect on economic growth and that it is more likely to have a negative effect, or at best no significant impact at all. Thus, reducing arms and military spending need not be costly and can contribute to, or at the very least provide the opportunity for, improved economic performance in developing countries.Military Spending; Development; growth
Fiscal policy, trigger points and interest rates: Additional evidence from the U.S.
No full textWe empirically investigate whether the relationship between interest rates and public deficits/debt may be nonlinear for the U.S. Using threshold estimation, we find evidence of level-dependent effects on interest rates, implying a significant effect of projected deficits and debt in the U.S. only if the deficit surpasses approximately 5% of GDP
Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach
No full textThe defense-growth nexus is investigated empirically using longitudinal data for Guatemala and allowing the effect of defense spending on growth to be nonlinear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative, albeit insignificant, for higher levels.Guatemala, defense expenditures, nonlinearity, economic growth, externality effect
Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach
No full textThe defense-growth nexus is investigated empirically using longitudinal data for Guatemala and allowing the effect of defense spending on growth to be nonlinear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative, albeit insignificant, for higher levels
Ricardian Equivalence Revisited: Evidence from OECD countries
No full textUsing a theoretical model based on dynamic optimizing agents, we test empirically the Ricardian Equivalence Proposition (REP) for 26 OECD countries. The empirical specification allows us to obtain estimates of the structural parameters of the theoretical model and to test directly the hypothesis implied by the REP. We find that the REP cannot be rejected for 10 out of 26 countries, where 9 of these 10 countries are European.
Is the Ricardian Equivalence Proposition an 'Aerie Fairy' Theory for Europe?
No full textUsing a theoretical model based on dynamic optimizing agents, we test empirically the Ricardian equivalence proposition (REP) for the EU-15 countries. The theoretical setting allows us to obtain estimates of the structural parameters of the model and to test directly the hypothesis implied by the REP. Using recently developed end-of-sample cointegration breakdown tests, we find evidence of a change in the fiscal behaviour of individuals during the last decade-after the introduction of a fiscal rule, namely the Maastricht criteria-for most countries in the sample. The results concerning the direction of change are mixed. Copyright (c) The London School of Economics and Political Science 2007.
