Budget Deficits Sustainable? An Empirical Analysis For OECD Countries

In this study, budget deficit sustainability in OECD countries, are investigated via intertemporal budget constraint approach in 1980-2012 periods and quarterly data used. In analysis firstly, Cross Sectionally Dependency (CD) in country was examined CDLM test (Cross Sectionally Dependency Lagrange Multiplier) developed by Pesaran (2004). Stationary of series was searched CADF test (Cross-Sectionally Augmented Dickey-Fuller) developed by Pesaran (2006) considering CD. Cointegration relationship among series was examined panel cointegration test with multiple structural breaks developed by Basher and Westerlund (2009). As a result of analysis, cointegration relationship between the series was determined. According to the longrun analysis, budget deficits of these countries are sustainable in weak form. (C) 2014 The Authors. Published by Elsevier Ltd.