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Title: A segmented trend model to assess fiscal sustainability: The US experience 1929-2009
Authors: Abeysinghe, T. 
Jayawickrama, A.
Keywords: Long-run and short-run fiscal sustainability
Present-value borrowing constraint
Rational expectations
Unadjusted and adjusted trends of debt ratios
Issue Date: Jun-2013
Citation: Abeysinghe, T., Jayawickrama, A. (2013-06). A segmented trend model to assess fiscal sustainability: The US experience 1929-2009. Empirical Economics 44 (3) : 1129-1141. ScholarBank@NUS Repository.
Abstract: The academic literature has focused largely on testing for long-run fiscal sustainability. In this exercise we formulate a flexible regression model that can be used to assess the sustainability of a more recent build-up of fiscal deficits and debt that would be of major concern to policy makers. The analysis of US data shows that, after adjusting for some fundamentals, the gross Federal debt-income ratio has been growing at an unsustainable rate of 4 % per year since 2007. The net debt-income ratio does not show such a significant trend. Since not all government assets are readily available to reduce debt, significant positive trends in the gross debt-income ratio calls for policy actions. © 2012 Springer-Verlag.
Source Title: Empirical Economics
ISSN: 03777332
DOI: 10.1007/s00181-012-0584-2
Appears in Collections:Staff Publications

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