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Test of fiscal sustainability and causality hypotheses for Switzerland

Swiss Journal of Economics and Statistics volume 146, pages 481–506 (2010)Cite this article

Summary

This paper examines the causality between the Swiss federal governments revenue and expenditure over the 1900 to 2002 period by estimating the short- and long-run relation within an error-correction approach that places more emphasis on the long-run relation as a source of the causal link. The results suggest both that the fiscal policy is consistent with the governmental budget constraint — revenue and expenditure are cointegrated, and revenue cause expenditure and vice versa. There is also evidence that World War II had a significant impact on the stability of the cointegrating relation between revenue and expenditure.

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  1. Swiss Banking Institute, Plattenstr. 14, CH-8032, Zurich, Switzerland

    Silika Prohl

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  1. Silika Prohl
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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License ( https://creativecommons.org/licenses/by/2.0 ), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Prohl, S. Test of fiscal sustainability and causality hypotheses for Switzerland. Swiss J Economics Statistics 146, 481–506 (2010). https://doi.org/10.1007/BF03399324

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