| Summary: | 碩士 === 逢甲大學 === 財稅所 === 95 === In the past ten years, the debt of our government is accumulated rapidly, the nation’s financial state has worsens daily. This research examines whether the public debt of Taiwan is sustainable. Domestic research on the relevant topic has been scarce. Most publications examine whether the government intertemporal budget is balanced. When assessing the sustainability of the deficit. This study approaches the topic from a debt sustainability perspective. However, if only a linear model is used to assess the sustainability of the public debt, the adjustment behavior observable under a non-linear approach will be neglected. Therefore this research adopts a non-linear model to analysis the sustainability of Taiwan’s public debt.
By following Sarno (2001), this study examines the sustainability of the public debt of Taiwan’s government. The results show that the adjustment behavior of the public debt has non-linear characteristics instead of that an involution phenomenon of mean reversion. This suggests that the public debt of Taiwan is unsustainable and if allowed to continue grow, the government will soon encounter a financial crisis. In addition, if considering time as the transition variable, the study finds that the structure changes took place after 1999, in contrary to the long run balanced level, and has yet reversed up to this day.
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