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Fiscal Sustainability of the German Länder: Time-Series Evidence

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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.
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Document Type: Research Article

Publication date: March 1, 2017

This article was made available online on February 20, 2017 as a Fast Track article with title: "Fiscal Sustainability of the German Länder: Time-Series Evidence".

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  • As one of the world's oldest professional journals in public finance, founded in 1884, FinanzArchiv (FA) publishes original work from all fields of public economics which are of interest to an international readership, e.g. taxation, public debt, public goods, public choice, federalism, market failure, social policy, and the welfare state. Special emphasis is on high-quality theoretical and empirical papers on current policy issues.

    FA is a peer-reviewed journal commited to a prompt turnaround of submissions.

    FA is listed in the Social Science Citation Index (SSCI), in Current Contents/Social and Behavioral Sciences, in Econ Lit, in the Journal of Economic Literature, in IDEAS and RePEc and in the International Bibliography of the Social Sciences.

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