Fiscal Sustainability of Eurozone Governments: An Empirical Review of the Past Decade

Astrid Ayala, Szabolcs Blazsek

Abstract


We provide an empirical review of fiscal sustainability of Eurozone governments by using quarterly data on debt to Gross Domestic Product (GDP) and primary deficit to GDP over the period 1999 to 2010. We verify the conditions of fiscal sustainability, defined by the government’s present value borrowing constraint, by applying unit root tests that involve one, two, or multiple structural breaks. We select the best performing model of structural breaks and group Eurozone governments with respect to fiscal sustainability.

Full Text: PDF DOI: 10.5539/res.v6n1p143

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This work is licensed under a Creative Commons Attribution 3.0 License.

Review of European Studies   ISSN 1918-7173 (Print)   ISSN 1918-7181 (Online)

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