Fiscal Deficit Sustainability in Taiwan and China

• Main Authors: En-ruei Chang, 張恩瑞
• Other Authors: Chiung-ju Huang
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/37740552085206548909

碩士 === 逢甲大學 === 財稅所 === 96 === In the past a decade, fiscal deficit has worsened daily for almost countries in the world. This study is to examine the fiscal deficit sustainability for Taiwan and China. Using linear model to examine the fiscal deficit sustainability usually ignores structural breaks and makes a mistake, so this research uses a nonlinear model to analysis the fiscal deficit sustainability for Taiwan and China. This study uses Sarno (2001) and the fiscal deficit over GDP to examine the fiscal deficit sustainability. The annual data covers the period 1955 to 2005. Variables in the models are including total government revenues, total government expenditures, and GDP. Empirical results show that using a nonlinear model to examine the fiscal deficit sustainability is more appropriate than using a linear model. There is a mean reverting regression phenomenon for both Taiwan and China. Therefore, the fiscal deficit sustainability exists in Taiwan and China. In the long run, the government deficit for Taiwan and China is going to be the equilibrium.