The quest for a fiscal rule : Italy, 1861–1998
Title: The quest for a fiscal rule : Italy, 1861–1998
Author: RICCIUTI, Roberto
Citation: Cliometrica, 2008, Vol. 2, No. 3, pp. 259-274
ISSN: 1863-2505; 1863-2513
The Italian fiscal history is characterised by a number of fiscal consolidations. In this study, we characterise fiscal policy in terms of non-linear deterministic processes. We find that government spending and taxes can be described as being non-linear trend stationary processes instead of unit roots. A long run equilibrium relationship—a non-linear co-trend—does exist between the two series, fulfilling the intertemporal government budget constraint. We interpret this result as evidence of a long run fiscal rule that different policy makers have adopted, putting public finance in balance.
Subject: Intertemporal government budget constraint; Non-linear trend stationarity; Non-linear co-trending; E620; H62; N100
First online: 04 December 2007; Published also in: Institute of Public Policy and Public Choice - POLIS, 2007 (2007-09)
Published version: http://econpapers.repec.org/paper/ucaucapdv/86.htm
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