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Tax revenue elasticities are an important parameter in the management of the revenue side of the government budget as they provide information about the impact of economic growth on tax revenues and fiscal sustainability. A growing number of empirical studies have estimated such elasticities or buoyancies for different countries using various methods. This paper follows a novel approach of deriving tax revenue elasticities that are consistent with a balanced budget for six Central and Eastern European countries using data over the period 1995-2019. These derived elasticities were then compared to actual estimates reported in other studies. The main conclusion from this comparison is that, for most cases considered, tax revenues were responsive enough to economic growth to support fiscal sustainability.

Using the model derived by Bajo-Rubio (2014), this paper estimates government budget balance-consistent growth rates for the euro area countries. A comparison of these estimates to their actual growth rates indicates that most of these countries are growing at rates that are very similar to their government balance-consistent growth rates. This finding implies that many euro area countries would not be experiencing excessive imbalances in their government budget over the long-run that could harm future economic growth. The analysis has also shown that for many euro area countries, the predictions of the model seem to be broadly consistent with their actual fiscal experience.

Using the model derived by Bajo-Rubio (2014), this paper estimates government budget balance-consistent growth rates for the euro area countries. A comparison of these estimates to their actual growth rates indicates that most of these countries are growing at rates that are very similar to their government balance-consistent growth rates. This finding implies that many euro area countries would not be experiencing excessive imbalances in their government budget over the long-run that could harm future economic growth. The analysis has also shown that for many euro area countries, the predictions of the model seem to be broadly consistent with their actual fiscal experience.

Using the model derived by Bajo-Rubio (2014), this paper estimates government budget balance-consistent growth rates for the euro area countries. A comparison of these estimates to their actual growth rates indicates that most of these countries are growing at rates that are very similar to their government balance-consistent growth rates. This finding implies that many euro area countries would not be experiencing excessive imbalances in their government budget over the long-run that could harm future economic growth. The analysis has also shown that for many euro area countries, the predictions of the model seem to be broadly consistent with their actual fiscal experience.

[Abstract] Using the model derived by Bajo-Rubio (2014), this paper estimates government budget balance-consistent growth rates for the euro area countries. A comparison of these estimates to their actual growth rates indicates that most of these countries are growing at rates that are very similar to their government balance-consistent growth rates. This finding implies that many euro area countries would not be experiencing excessive imbalances in their government budget over the long-run that could harm future economic growth. The analysis has also shown that for many euro area countries, the predictions of the model seem to be broadly consistent with their actual fiscal experience.

PurposeThe purpose of this paper is to use disaggregated data on US‐UK trade to investigate the effects of exchange rate depreciation on trade in services both in the short‐ and long‐run.Design/methodology/approachThe paper focuses on the three traditional categories of internationally traded services – travel, passenger fares and other transportation services – and employs the "bounds" testing procedure advanced by Pesaran, Shin and Smith to investigate the J‐curve effect.FindingsThe results reveal that the real exchange rate has a statistically significant effect on trade in services in at least one of the time periods. The results also provide some support for the J‐curve effect.Practical implicationsEmpirical evidence on the J‐curve provides policymakers with valuable information about the effects of currency depreciation on the trade balance.Originality/valueTo the best of the author's knowledge this is the first paper to investigate the J‐curve effect using data on trade in services.

Using the recently developed 'bounds' testing approach, this paper provides evidence that Cyprus is not in violation of its intertemporal budget constraint and its current account balance is 'strongly' sustainable in the long-run. A policy implication of these findings is that the loss of exchange rate policy following the adoption of the Euro in 2008 may not be a serious cost for Cyprus. On a methodological level, the results presented in this paper support theoretical models that employ an intertemporal approach to modeling the current account.

Keywords: Intertemporal budget constraint; current account sustainability; Cyprus.

JEL: F320, F410