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Testing Stationarity of Budgetary Position in Developing Countries

In this paper, we examine stationarity properties of data on budget deficits for a cluster of twenty-seven developing countries (D-27) for the period spanning 1970 to 2003. It has been argued in the literature that this statistical property correlates well with the economic property of sustainabilit...

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Main Authors: Lau, Evan, Ahmad Zubaidi, Baharumshah, Shazali, Abu Mansor, Puah, Chin-Hong
Format: E-Article
Language:English
Published: Econometric Research Association 2011
Subjects:
HB Economic Theory
Online Access:http://ir.unimas.my/id/eprint/1797/1/Testing%2BStationarity%2Bof%2BBudgetary%2BPosition%2Bin%2BDeveloping%2BCountries%20%282%29.pdf
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spelling my.unimas.ir.17972016-04-12T02:11:08Z http://ir.unimas.my/id/eprint/1797/ Testing Stationarity of Budgetary Position in Developing Countries Lau, Evan Ahmad Zubaidi, Baharumshah Shazali, Abu Mansor Puah, Chin-Hong HB Economic Theory In this paper, we examine stationarity properties of data on budget deficits for a cluster of twenty-seven developing countries (D-27) for the period spanning 1970 to 2003. It has been argued in the literature that this statistical property correlates well with the economic property of sustainability of the budget deficit. The univariate unit root tests indicated a non-stationary process of I(1) with the exception of three countries. However, the non-stationary properties were rejected when the panel unit roots procedures were adopted. Since panel procedures provide greater power, the statistical evidence favors stationarity. This in turn suggests that budgets deficits in our sample of countries are sustainable, an important conclusion with many real world economic implications. The conflict between single country results and panel results suggests that univariate procedures may lead to the wrong conclusions. Econometric Research Association 2011 E-Article NonPeerReviewed text en http://ir.unimas.my/id/eprint/1797/1/Testing%2BStationarity%2Bof%2BBudgetary%2BPosition%2Bin%2BDeveloping%2BCountries%20%282%29.pdf Lau, Evan and Ahmad Zubaidi, Baharumshah and Shazali, Abu Mansor and Puah, Chin-Hong (2011) Testing Stationarity of Budgetary Position in Developing Countries. International Econometric Review (IER). ISSN 1308-8793 (print). 1308-8815 (online)
institution Universiti Malaysia Sarawak
building Centre for Academic Information Services (CAIS)
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaysia Sarawak
content_source UNIMAS Institutional Repository
url_provider http://ir.unimas.my/
language English
topic HB Economic Theory
spellingShingle HB Economic Theory
Lau, Evan
Ahmad Zubaidi, Baharumshah
Shazali, Abu Mansor
Puah, Chin-Hong
Testing Stationarity of Budgetary Position in Developing Countries
description In this paper, we examine stationarity properties of data on budget deficits for a cluster of twenty-seven developing countries (D-27) for the period spanning 1970 to 2003. It has been argued in the literature that this statistical property correlates well with the economic property of sustainability of the budget deficit. The univariate unit root tests indicated a non-stationary process of I(1) with the exception of three countries. However, the non-stationary properties were rejected when the panel unit roots procedures were adopted. Since panel procedures provide greater power, the statistical evidence favors stationarity. This in turn suggests that budgets deficits in our sample of countries are sustainable, an important conclusion with many real world economic implications. The conflict between single country results and panel results suggests that univariate procedures may lead to the wrong conclusions.
format E-Article
author Lau, Evan
Ahmad Zubaidi, Baharumshah
Shazali, Abu Mansor
Puah, Chin-Hong
author_facet Lau, Evan
Ahmad Zubaidi, Baharumshah
Shazali, Abu Mansor
Puah, Chin-Hong
author_sort Lau, Evan
title Testing Stationarity of Budgetary Position in Developing Countries
title_short Testing Stationarity of Budgetary Position in Developing Countries
title_full Testing Stationarity of Budgetary Position in Developing Countries
title_fullStr Testing Stationarity of Budgetary Position in Developing Countries
title_full_unstemmed Testing Stationarity of Budgetary Position in Developing Countries
title_sort testing stationarity of budgetary position in developing countries
publisher Econometric Research Association
publishDate 2011
url http://ir.unimas.my/id/eprint/1797/1/Testing%2BStationarity%2Bof%2BBudgetary%2BPosition%2Bin%2BDeveloping%2BCountries%20%282%29.pdf
http://ir.unimas.my/id/eprint/1797/
_version_ 1644508939180572672
score 13.211869

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