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Author:
Marco Tronzano, Università degli Studi di Genova, Dipartimento di Economia e Metodi Quantitativi, Genova, Italia

Reassessing the Sustainability of Public Finances in Poland: Evidence from a Multicointegration Approach

Volume 70 - Issue 4, October 2017
(pp. 509-526)
JEL classification: C22, E62, H62
Keywords: Fiscal Sustainability, Transition Economies, Poland, Cointegration, Multicointegration

Abstract

This paper extends the analysis carried out in Tronzano (2017) reassessing the sustainability of  Poland’s public finances in a stochastic environment. A single-step multicointegration test detects the existence of first-order cointegration between revenues and expenditures flows. However, these fiscal variables are not multicointegrated, thus violating a crucial condition for fiscal sustainability in a stochastic environment. Overall, this empirical evidence supports the policy implications outlined in Tronzano (2017) (further fiscal consolidation and a more balanced fiscal-mix between revenues and expenditures). A further implication is that the above guidelines should be implemented introducing a systematic policy reaction to contingent disequilibria in public debt.


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Institute for International Economics
of the Genoa Chamber of Commerce


Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)
www.ge.camcom.gov.it