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UK fiscal policy sustainability, 1955–2006

Fan, Jingwen and Arghyrou, Michael ORCID: https://orcid.org/0000-0001-6222-5086 2011. UK fiscal policy sustainability, 1955–2006. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

We test for fiscal policy sustainability in the UK for the period 1955-2006. We find evidence of sustainability with three structural breaks, respectively occurring in the early 1970s, early 1980s and late 1990s. UK fiscal policy has been sustainable throughout the sample period except from 1973-1981 when a non-Ricardian regime applied. For the remaining periods correction of fiscal disequilibrium occurs through adjustments in public revenue rather than expenditure. Finally, we find evidence of non-linear fiscal adjustment, with UK authorities not reacting to relatively small deficits; but correcting exceedingly large deficits and any temporary surpluses relatively fast.

Item Type: Monograph (Working Paper)
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
Publisher: Cardiff University
Date of First Compliant Deposit: 30 March 2016
Last Modified: 28 Oct 2022 10:20
URI: https://orca.cardiff.ac.uk/id/eprint/77877

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