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2 edition of Testing for government intertemporal solvency found in the catalog.

Testing for government intertemporal solvency

Andrea Cipollini

Testing for government intertemporal solvency

a smooth transition error correction model approach

by Andrea Cipollini

  • 184 Want to read
  • 27 Currently reading

Published by University of Bristol, Department of Economics in Bristol .
Written in English


Edition Notes

StatementAndrea Cipollini.
SeriesDiscussion paper / University of Bristol, Department of Economics -- no.98/460, Discussion paper (University of Bristol, Department of Economics) -- no.98/460.
ID Numbers
Open LibraryOL17852214M

Chapter pages in book: (p. 37 - 83) 2 Fiscal expenditures and international economic interdependence JACOB A. FRENKEL AND ASSAF RAZIN* I Introduction One of the major sources of recent friction between Europeans and Americans has been the interpretation of the economic implications of USCited by: 1.   A country is deemed to be on a sustainable path if the Z tests indicate that both the unit root hypothesis and the presence of a deterministic trend or positive drift can be rejected. Not all the seven countries being considered satisfy the intertemporal budget constraint. Solvency is not an issue at all in the UK and France. COVID Resources. Reliable information about the coronavirus (COVID) is available from the World Health Organization (current situation, international travel).Numerous and frequently-updated resource results are available from this ’s WebJunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus.   The Italian government's Intertemporal Budget Constraint (IBC) is formally respected, in spite of the high levels of public debt. Nevertheless, the burden of correcting budgetary disequilibria is entirely carried out via changes in the average tax rate, rather than changes in government .

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Testing for government intertemporal solvency by Andrea Cipollini Download PDF EPUB FB2

Applied macroeconomists have tested for the government intertemporal solvency condition by either testing for linear stationarity in the total government deficit series or testing for linear cointegration between total government spending and total tax by: Downloadable (with restrictions). Applied macroeconomists have tested for the government intertemporal solvency condition by either testing for linear stationarity in the Testing for government intertemporal solvency book government deficit series or testing for linear cointegration between total government spending.

Downloadable (with restrictions). This article tests whether the government's intertemporal budget restriction was fulfilled during the Brazilian imperial period ().

To accomplish this, newly developed tests for cointegration with unknown structural breaks are applied. It is found that government spending and government revenue are cointegrated if the effect of two unknown structural. Testing for the government's intertemporal budget restriction in Brazil during – Article (PDF Available) in Applied Economics 45(12) April with 71 Reads.

Testing government solvency and the No Ponzi Game condition Book. Jan ; Angélique Herzberg Previous tests of intertemporal budget balance and present value relationships have. This paper presents a literature review regarding the assessment of government solvency and fiscal policy.

While indicators for fiscal sustainability are forward looking and based on expected future fiscal policies, tests are backward looking and based on information about the past values of fiscal : Paolo Canofari, Alessandro Piergallini.

Downloadable (with restrictions). The paper derives new conditions for government solvency. It is shown that the Testing for government intertemporal solvency book Ponzi Game condition is satisfied when government debt is integrated of any finite order but not when government debt is an explosive process.

The Intertemporal Government Budget Constraint In order to examine the relationship which exists between the government's fiscal stance and the performance of the macroeconomy, the appropriate framework is the government's intertemporal budget constraint.

This can be written either in nominal terms and\or as a. On the Solvency of Nations: Are Global Imbalances Consistent with Intertemporal testing for solvency per se is not very useful, since it is hard to imagine a macroeconomic time series that is not integrated of low order.

In addition, Bohn shows that if bounds on debt or nfa 1Bohn focused on public debt, the primary flscal balance and the. Intertemporal solvency and public debt: evidence from Brazil– 9 The article is structured as follows.

In section 2 we discuss some methodological issues involving the study of the debt sustainability. Section 3 is on data analysis. Finally, in section 4 we present conclusions and a. We test this hypothesis using data for 21 industrial and 29 emerging economies for the period to search for existence of negative relationship between NX and NFA.

The results show that, despite the large global imbalances of recent years, NX and NFA positions are consistent with external solvency. Provided that the government solvency constraint need to be imposed, these tests develop from the idea of verifying whether the intertemporal budget constraint of the public sector would be satisfied a) had the fiscal and financial policy in the sample been pursued indefinitely and b) were the relevant macro and structural features of the economy.

This paper discusses different empirical tests of public sector solvency and applies them to a sample of 18 OECD countries. Under the maintained hypothesis that the government solvency constraint needs to be imposed, these tests develop from the idea of verifying whether the intertemporal budget constraint of the public sector would be satisfied (a) if the fiscal and financial policy in the Cited by:   CONTRIBUTOR’S CORNER This guest post on methods of testing solvency was contributed to the Bankruptcy Blog by David Tabak of NERA Economic Consulting.

Questions of solvency often arise in bankruptcy and related matters such as claims of fraudulent conveyance. One would hope that such an important concept would have a single, clear definition along with [ ]. Fiscal sustainability requires that governments are able to respect the intertemporal budget constraint (IBC) in present value terms.

In this paper, we test for sustainability by performing an. Intertemporal Budget Constraint and Public Debt Sustainability: The Case of Italy.

Article (PDF Available) in Applied Economics 25(2) February with Reads How we measure 'reads'. " Testing for Government Intertemporal Solvency: A Smooth Transition Error Correction Model Approach," Manchester School, University of Manchester, vol.

69(6), pagesDecember. Trehan, Bharat & Walsh, Carl E., We test for sustainability of Turkey’s current account position between and using the intertemporal solvency model of Craig S.

Hakkio and Mark Rush () and Steven Husted (). " Testing for Government Intertemporal Solvency: A Smooth Transition Error Correction Model Approach," Manchester School, University of Manchester, vol.

69(6), pagesDecember. Johansen, Soren, " Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol.

12(), pages Such tests are found in the literature concerning a government's solvency, starting with the contribution by Hamilton and Flavin () and subsequently developed by Trehan and Walsh (), Wilcox (), Hakkio and Rush (), Smith and Zin (), Corsetti and Roubini (), Buiter and Patel Cited by: In the framework of intertemporal approach to current account determination, they examine whether current account, under perfect capital mobility, serves as a buffer stock against shocks to output, investment and government expenditure.

Statistically they examine this by testing if the variance of actual current account. Data are quarterly. Notes 1. Tests for the stationarity of the first difference of government debt in Brazil are reported by Welch ().

In this paper, his results are confirmed. It has also been shown that intertemporal solvency implies the cointegration of expenditures, revenue, and debt (Hakkio and Ruch, ; Bohn, ; Tanner and Liu Cited by: The tests we conduct differ from several of the tests conducted in this literature, and in the related literature testing for fiscal solvency, which (with the exception of Mendoza and Ostry) generally test for unit roots in the foreign debt-GDP (or public debt-GDP) and NX-GDP (or primary balance-GDP) ratios; for cointegration between exports.

Note: Citations are based on reference standards. However, formatting rules can vary widely between applications and fields of interest or study. The specific requirements or preferences of your reviewing publisher, classroom teacher, institution or organization should be applied.

Again, the intertemporal solvency constraint does impose some limits on the behavior of the non-interest fiscal balance (i.e. the primary fiscal balance). The solvency constraint requires that the discounted value of primary balances should be at least equal to the initial public debt; if a government is initially running primary deficits andFile Size: 83KB.

Intertemporal Choice: An economic term describing how an individual's current decisions affect what options become available in the future. Theoretically, by not consuming today, consumption Author: Daniel Liberto. Several recent papers explore the empirical implications of the government's intertemporal solvency condition.(3) However, except for Trehan and Walsh [22] and Wickens and Uctum [23], few papers have explored the empirical implications of the international intertemporal solvency condition (1).

Testing the FTPL across government tiers and government solvency eventually has to be ensured in real terms, monetary policy can only ‘passively’ is the intertemporal government budget constraint.

The government cannot run unsustainable policies but should pay off, monetise or refinance debt. To conclude, an important broad insight that emerges from the present paper is that empirical study of government solvency requires the simultaneous analysis of indicators and tests.

Fiscal sustainability indicators are an informative complementary tool to testing for intertemporal government : Paolo Canofari, Giancarlo Marini, Alessandro Piergallini.

Case of Life Insurance Company – Solvency II capital 9 In analysing investment decisions, the required capital for both the market risk and the operational risk is taken into account (other risks unchanged) Solvency Testing Current policy Market value assets €Fiscal policy seeks to equilibrate the public sector's financing needs with the private sector's demand for investment and a sustainable balance of payments.

Correct measurement of the public sector's net use of resources is therefore an important prerequisite for managing the macroeconomy.

This volume, edited by Mario I. Blejer and Adrienne Cheasty, is organized around four issues: the. Tax tilting results in a bias towards either budget deficits or budget surpluses, which are created in a manner consistent with intertemporal solvency.

For example, if βgovernment's incentive is to shift taxes into the future, run fiscal deficits, increase its current level of liabilities and then gradually raise taxes over time.

Such Cited by: — IAS 20 Accounting for Government Grants and Disclosure of Government Assistance — IAS 21 The Effects of Changes in Foreign Exchange Rates — IAS 23 Borrowing Costs — IAS 24 Related Party Disclosures — IAS 26 Accounting and Reporting by Retirement Benefit Plans — IAS 27 Consolidated and Separate Financial Statements.

Solvency and liquidity are both terms that refer to an enterprise's state of financial health, but with some notable differences. Solvency and liquidity are equally important for a company's Author: Investopedia Staff.

Solvency is the ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business as it asserts a company’s ability to continue operations into the. This paper discusses different empirical tests of public sector solvency and applies them to a sample of 18 OCED countries.

Provided that the government solvency constraint need to be imposed, these tests develop from the idea of verifying whether the intertemporal budget constraint of the public sector would be satisfied a) had the fiscal and financial policy in the sample been pursued.

An Empirical Study on the Origins of the Asian Crisis*** March these two views empirically by testing external solvency and examining intertemporal borrowing constraints of the three most-affected countries: Thailand, Indonesia and Korea.

Numerous research papers, books, and proceedings have been produced. Government intertemporal budget constraint. The central focus of the literature on government solvency and fiscal policy sustainability is the government’s intertemporal or present value budget constraint.1/ This is the requirement that the discounted present value of primary surpluses in terms of GDP must be equal to the initial stock of government debt in terms of GDP.

The Deficit as an Indicator of Government Solvency: Changes in Public Sector Net Worth The so-called deficiencies described above are similar in that they do not affect the current year’ s borrowing requirement. 6 Moreover, although the consequences of these issues generate ample debate, their combined effect on aggregate demand in any single.

Solvency ratios are primarily used to measure a company's ability to meet its long-term obligations. In general, a solvency ratio measures the size Author: Ryan Fuhrmann. For any purpose of the Companies Act, a Company satisfies the solvency and liquidity test at a particular time if, considering all reasonably foreseeable financial circumstances of the Company at that time: (a) the assets of the Company or, if the Company is a member of a group of Companies, the aggregate assets of the Company, as fairly valued.They present evidence that supports this restriction.

Hakkio and Rush () point out that a necessary condition for intertemporal solvency is the existence of cointegration between government expenditure, inclusive of interest payments, and government revenues, with a cointegrating vector equal to [1, -[beta]]', and 0 [beta] 1.

Testing the fiscal theory of price level in case of Pakistan. Link/Page Citation influential study is the first attempt to show how the government intertemporal budget constraint may affect monetary policy conditions and, in particular, price dynamics After this study a number of papers have tried to assess from an empirical perspective how.