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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 1999:5:
Fiscal Policy in Sweden: Effects of EMU Criteria Convergence

Abdulnasser Hatemi-J

Abstract: This paper investigates the sustainability of fiscal policy in Sweden performed during the period 1963:01-1997:04. On the basis of Johansen's VAR and the augmented Granger causality tests, the results show that taxes and spending are causally related in the long-run and the homogeneity condition is supported empirically. The effect of EMU criteria convergence on fiscal policy is also investigated empirically. “Pantula principle” is applied for determining the form of deterministic trend component. Special attention is given to the lag-choosing process.

Keywords: Spending; revenue; Granger causality; cointegration; Johansen's VAR; EMU; (follow links to similar papers)

JEL-Codes: C32; H21; H62; (follow links to similar papers)

27 pages, September 21, 1999, Revised November 1999

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This paper is published as:
Hatemi-J, Abdulnasser, (2002), 'Fiscal Policy in Sweden: Effects of EMU Criteria Convergence', Economic Modelling, Vol. 19, No. 1, pages 121-136



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