Abstract
In this paper we test whether German public debt has been sustainable by testing how the primary surplus to GDP ratio reacts to the debt to GDP ratio. We apply semi-parametric regressions with time depending coefficients. This test shows that the mean of the coefficient relevant for sustainability is significantly positive over the time period considered. However, there is a negative trend in that coefficient which seems to have ceased to decline only in the middle to late 1990s.
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Appendix: data
Appendix: data
Source: OECD Economic Outlook Statistics and Projections.
We use the Data Set corresponding to those published in the June 2003 issue of the OECD Economic Outlook, particularly the entire data set for the Government Account and the series for Gross Domestic Product at Market Prices (GDP).
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Greiner, A., Koeller, U. & Semmler, W. Testing the sustainability of German fiscal policy: evidence for the period 1960–2003. Empirica 33, 127–140 (2006). https://doi.org/10.1007/s10663-006-9011-2
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DOI: https://doi.org/10.1007/s10663-006-9011-2