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Cover of: Fiscal Sustainability of the German Länder: Time-Series Evidence
Lars P. Feld, Ekkehard A. Köhler, Heiko T. Burret

Fiscal Sustainability of the German Länder: Time-Series Evidence

Section: Articles
Volume 73 (2017) / Issue 1, pp. 103-132 (30)
Published 09.07.2018
DOI 10.1628/001522117X14864674910029
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  • 10.1628/001522117X14864674910029
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Summary
We analyze the sustainability of public finances in the 16 states (Länder) of the Federal Republic of Germany, using an unprecedentedly comprehensive fiscal data set covering the period from 1950 to 2011 for West German Länder and from 1991 to 2011 for East German Länder. We extend the existing literature in that we apply unit-root and stationarity tests not only to debt but also to expenditure and revenue and explore their long-run relation in cointegration analyses for each Land. The results provide evidence against strict fiscal sustainability in a majority of German Länder. A notable exception to this finding is Bavaria.