Sustainability in Public Finance: The Case of Lithuania 1999-2008
Abstract: The essay discusses the long-run fiscal sustainability issues for one of the EU member states – Lithuania. Investigating properties of the public debt time series for the period 1999:1-2008:2, it is concluded that past fiscal policy in the country has been sustainable. A set of econometrical procedures was employed to analyse past fiscal time series, leading to the main conclusion that a sustainable public debt development is achieved through the total budget balance management policy. In the long-run, the control over the total budget deficits outcomes is maintained by adjusting public spending to the movements in revenue. Such a fiscal policy reaction function thus allowed the government to keep the debt-to-GDP ratio on the sustainable path.
AT THIS PAGE YOU CAN DOWNLOAD THE WHOLE ESSAY. (follow the link to the next page)