Optimal taxation and budget deficits: Evidence for the EU's New Member States

The tax smoothing hypothesis (TSH) is tested for the New Member States of the European Union. Our results show that the TSH holds for five countries, the introduction of the Maastricht 3%-deficit rule, however, had very little effect with regard to the validity of the TSH.Tax smoothing, Government budget constraint, Fiscal rule, Cointegration

Ricardian Equivalence Revisited: Evidence from OECD countries

Using a theoretical model based on dynamic optimizing agents, we test empirically the Ricardian Equivalence Proposition (REP) for 26 OECD countries. The empirical specification allows us to obtain estimates of the structural parameters of the theoretical model and to test directly the hypothesis implied by the REP. We find that the REP cannot be rejected for 10 out of 26 countries, where 9 of these 10 countries are European.

Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach

The defense-growth nexus is investigated empirically using longitudinal data for Guatemala and allowing the effect of defense spending on growth to be nonlinear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative, albeit insignificant, for higher levels.Guatemala, defense expenditures, nonlinearity, economic growth, externality effect

"Guns or Butter?" Revisited: Robustness and Nonlinearity Issues in the Defense-Grotwth Nexus

The relationship between military expenditure and growth is studied taking into account potential nonlinearities and robustness issues in the specification of the econometric models used. Using cross-country growth regressions and the widely used Feder-Ram model, the partial correlation between defense and economic growth appears robust and significantly negative only for countries with a relatively low military expenditure ratio. While the externality effect appears positive in this subgroup of countries, the overall effect turns negative due to the size effect of the military sector.

Assessing Ricardian equivalence for the New Member States: Does debt-neutrality matter?

Ricardian equivalence Infinite horizons Liquidity constraints Government budget constraint Fiscal policy

A non-linear defence-growth nexus? evidence from the US economy

The defense-growth nexus is investigated empirically using time series data for the US and allowing the effect of defense spending on growth to be non-linear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: the positive externality effect of defense spending prevails for relatively lower levels of defense spending (with respect to the history of defense spending in the US) and reverts its influence for higher levels.Defense expenditures, Nonlinearity, Economic growth, Externality effect, Threshold models, JEL Codes, E20, E62, C22,