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Swiss Journal of Economics and Statistics

, Volume 146, Issue 2, pp 481–506 | Cite as

Test of fiscal sustainability and causality hypotheses for Switzerland

  • Silika Prohl
Open Access
Article
  • 31 Downloads

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.

JEL-Classification

C22 C23 H60 

Keywords

Budget Deficit Cointegration 

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Copyright information

© Swiss Society of Economics and Statistics 2010

Authors and Affiliations

  • Silika Prohl
    • 1
  1. 1.Swiss Banking InstituteZurichSwitzerland

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