********************************* *** BJPS replication do file **** *** Last update: 4 March 2014 *** ********************************* set mem 100m set more off encode worldbank_code, generate(country2) tsset country2 year tab year, gen(y) * Deficit, debt change, and SFA measures gen balance_gdp_edf = netlend_ublge3 gen debt_change = grossdebt_udgg2 - l.grossdebt_udgg2 gen debt_gdp_change = (debt_change / gdp_uvgd4)*100 gen sfa_new = debt_gdp_change + netlend_ublge3 * Transparency measure gen altlassenindex10b = al10_transparency / 11 gen obi2010 = obi_10score / 100 reg obi2010 altlassenindex10b predict obi2 reg obi2010 imf_rosc_transparency predict obi3 replace obi3 = obi2010 if obi2010~=. replace obi3 = obi2 if obi3==. * Slump and boom variables gen slump = 0 replace slump = gap_avggdt if gap_avggdt<0 replace slump = . if gap_avggdt==. gen slump2 = abs(slump) gen slump2_obi3 = slump2 * obi3 gen boom = 0 replace boom = gap_avggdt if gap_avggdt>0 replace boom = . if gap_avggdt==. gen booml3 = boom replace booml3 = 0 if boom < 3 gen booml3_obi3 = booml3 * obi3 * Election variable gen yrcurnt_obi3 = dpi_yrcurnt * obi3 * Stability and Growth Pact gen sgp = 0 replace sgp = 1 if worldbank_code=="AUT" & year > 1997 replace sgp = 1 if worldbank_code=="BEL" & year > 1997 replace sgp = 1 if worldbank_code=="BGR" & year > 1997 replace sgp = 1 if worldbank_code=="CYP" & year > 1997 replace sgp = 1 if worldbank_code=="CZE" & year > 1997 replace sgp = 1 if worldbank_code=="DEU" & year > 1997 replace sgp = 1 if worldbank_code=="DNK" & year > 1997 replace sgp = 1 if worldbank_code=="ESP" & year > 1997 replace sgp = 1 if worldbank_code=="EST" & year > 1997 replace sgp = 1 if worldbank_code=="FIN" & year > 1997 replace sgp = 1 if worldbank_code=="FRA" & year > 1997 replace sgp = 1 if worldbank_code=="GBR" & year > 1997 replace sgp = 1 if worldbank_code=="GRC" & year > 1997 replace sgp = 1 if worldbank_code=="HUN" & year > 1997 replace sgp = 1 if worldbank_code=="IRL" & year > 1997 replace sgp = 1 if worldbank_code=="ITA" & year > 1997 replace sgp = 1 if worldbank_code=="LTU" & year > 1997 replace sgp = 1 if worldbank_code=="LUX" & year > 1997 replace sgp = 1 if worldbank_code=="LVA" & year > 1997 replace sgp = 1 if worldbank_code=="MLT" & year > 1997 replace sgp = 1 if worldbank_code=="NLD" & year > 1997 replace sgp = 1 if worldbank_code=="POL" & year > 1997 replace sgp = 1 if worldbank_code=="PRT" & year > 1997 replace sgp = 1 if worldbank_code=="ROM" & year > 1997 replace sgp = 1 if worldbank_code=="SVK" & year > 1997 replace sgp = 1 if worldbank_code=="SVN" & year > 1997 replace sgp = 1 if worldbank_code=="SWE" & year > 1997 gen sgp_obi3 = sgp*obi3 * Main EU-15 sample gen emu15 = 0 replace emu15 = 1 if worldbank_code=="AUT" replace emu15 = 1 if worldbank_code=="BEL" replace emu15 = 1 if worldbank_code=="DEU" replace emu15 = 1 if worldbank_code=="ESP" replace emu15 = 1 if worldbank_code=="FIN" replace emu15 = 1 if worldbank_code=="FRA" replace emu15 = 1 if worldbank_code=="GRC" replace emu15 = 1 if worldbank_code=="IRL" replace emu15 = 1 if worldbank_code=="ITA" replace emu15 = 1 if worldbank_code=="LUX" replace emu15 = 1 if worldbank_code=="NLD" replace emu15 = 1 if worldbank_code=="PRT" replace emu15 = 1 if worldbank_code=="GBR" replace emu15 = 1 if worldbank_code=="DNK" replace emu15 = 1 if worldbank_code=="SWE" * Wider EU-27 sample gen eu27b = 0 replace eu27b = 1 if worldbank_code=="AUT" & year >= 1995 replace eu27b = 1 if worldbank_code=="BEL" & year >= 1952 replace eu27b = 1 if worldbank_code=="BGR" & year >= 2007 replace eu27b = 1 if worldbank_code=="CYP" & year >= 2004 replace eu27b = 1 if worldbank_code=="CZE" & year >= 2004 replace eu27b = 1 if worldbank_code=="DEU" & year >= 1952 replace eu27b = 1 if worldbank_code=="DNK" & year >= 1973 replace eu27b = 1 if worldbank_code=="ESP" & year >= 1986 replace eu27b = 1 if worldbank_code=="EST" & year >= 2004 replace eu27b = 1 if worldbank_code=="FIN" & year >= 1995 replace eu27b = 1 if worldbank_code=="FRA" & year >= 1952 replace eu27b = 1 if worldbank_code=="GBR" & year >= 1973 replace eu27b = 1 if worldbank_code=="GRC" & year >= 1981 replace eu27b = 1 if worldbank_code=="HUN" & year >= 2004 replace eu27b = 1 if worldbank_code=="IRL" & year >= 1973 replace eu27b = 1 if worldbank_code=="ITA" & year >= 1952 replace eu27b = 1 if worldbank_code=="LTU" & year >= 2004 replace eu27b = 1 if worldbank_code=="LUX" & year >= 1952 replace eu27b = 1 if worldbank_code=="LVA" & year >= 2004 replace eu27b = 1 if worldbank_code=="MLT" & year >= 2004 replace eu27b = 1 if worldbank_code=="NLD" & year >= 1952 replace eu27b = 1 if worldbank_code=="POL" & year >= 2004 replace eu27b = 1 if worldbank_code=="PRT" & year >= 1986 replace eu27b = 1 if worldbank_code=="ROM" & year >= 2007 replace eu27b = 1 if worldbank_code=="SVK" & year >= 2004 replace eu27b = 1 if worldbank_code=="SVN" & year >= 2004 replace eu27b = 1 if worldbank_code=="SWE" & year >= 1995 *** BJPS main regressions - graph in main paper and full results in Appendix 7 *** set more off * Balance, no lag, incl. Greece xtreg balance_gdp_edf dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Debt change, no lag, incl. Greece xtreg debt_gdp_change dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, no lag, incl. Greece xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, no lag, excl. Greece xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Shares and other equity, no lag, reduced sample excl. Greece and other countries with one observation or less xtreg eurostat_f5_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Other accounts payable, no lag, reduced sample excl. Greece and other countries with one observation or less xtreg eurostat_fli_oth_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) ****************** *** Appendices *** ****************** *** Appendix 6 *** replace booml3 = boom replace booml3 = 0 if boom < .5 replace booml3_obi3 = booml3 * obi3 xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) replace booml3 = boom replace booml3 = 0 if boom < 1.5 replace booml3_obi3 = booml3 * obi3 xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) replace booml3 = boom replace booml3 = 0 if boom < 2.5 replace booml3_obi3 = booml3 * obi3 xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) replace booml3 = boom replace booml3 = 0 if boom < 3.5 replace booml3_obi3 = booml3 * obi3 xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) *** Appendix 8 *** * SFA subcomponents table gen sfa_gfs = eurostat_gd_change_gdp - eurostat_edp_b9min_gdp * Detailed subcomponents with GFS data from Eurostat xtreg sfa_gfs dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_f_as_tr_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_tot_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_tot_x_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Breakdown of net acquision of financial assets xtreg eurostat_f2_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_f3_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_f4_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_f5_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_f_as_oth_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Breakdown of adjustments *xtreg eurostat_f34_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_fli_oth_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_iss_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_edp_d41_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_red_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_edp_k11_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_k121_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) xtreg eurostat_oth_k_adj_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Sample restrictions * Reduced sample, looking only at observations where deficits exceed 3% of GDP xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & balance_gdp_edf < -3 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Reduced sample, excluding 4 countries with substantial cumulative surpluses over the 1998-2007 period (DNK, FIN, IRL, SWE) xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~= "DNK" & worldbank_code~= "FIN" & worldbank_code~= "IRL" & worldbank_code~= "SWE" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Reduced sample, Eurozone only, excluding DNK, GBR, SWE xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="DNK" & worldbank_code~="GBR" & worldbank_code~="SWE" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Expanded sample, 25 EU countries xtreg sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if eu27b==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Adding a lag to all main regressions in the paper * Balance, with lag, incl. Greece xtreg balance_gdp_edf l.balance_gdp_edf dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Debt change, with lag, incl. Greece xtreg debt_gdp_change l.debt_gdp_change dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, with lag, incl. Greece xtreg sfa_new l.sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, with lag, excl. Greece xtreg sfa_new l.sfa_new dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Shares and other equity, with lag, reduced sample excl. Greece and other countries with one observation or less xtreg eurostat_f5_gdp l.eurostat_f5_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Other accounts payable, with lag, reduced sample excl. Greece and other countries with one observation or less xtreg eurostat_fli_oth_gdp l.eurostat_fli_oth_gdp dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Adding ideology and coalition dummies * Prime minister from a leftish party (based on DPI), dummy gen leftPM = 0 replace leftPM = . if dpi_execrlc==. replace leftPM = 1 if dpi_execrlc==3 * Coalition government (based on DPI), dummy gen coalition2 = 0 replace coalition2 = 1 if dpi_gov2seat > 0 replace coalition2 = . if dpi_gov2seat == . set more off * Balance, no lag, incl. Greece + ideology and coalition dummies xtreg balance_gdp_edf leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Debt change, no lag, incl. Greece + ideology and coalition dummies xtreg debt_gdp_change leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, no lag, incl. Greece + ideology and coalition dummies xtreg sfa_new leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * SFA, no lag, excl. Greece + ideology and coalition dummies xtreg sfa_new leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & worldbank_code~="GRC" & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Shares and other equity, no lag, reduced sample excl. Greece and other countries with one observation or less + ideology and coalition dummies xtreg eurostat_f5_gdp leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Other accounts payable, no lag, reduced sample excl. Greece and other countries with one observation or less + ideology and coalition dummies xtreg eurostat_fli_oth_gdp leftPM coalition2 dpi_yrcurnt yrcurnt_obi3 sgp sgp_obi3 slump2 slump2_obi3 booml3 booml3_obi3 lv_crisis_dummy y31 y33-y47 if emu15==1 & (worldbank_code=="BEL" | worldbank_code=="ESP" | worldbank_code=="FRA" | worldbank_code=="GBR" | worldbank_code=="NLD" | worldbank_code=="PRT") & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * Nonlinearity gen trans_high = 0 replace trans_high = 1 if obi3 > .74 replace trans_high = . if obi3 == . replace trans_high = . if emu15 == 0 gen trans_medium = 0 replace trans_medium = 1 if obi3 <= .74 & obi3 > .65 replace trans_medium = . if obi3 == . replace trans_medium = . if emu15 == 0 gen trans_low = 0 replace trans_low = 1 if obi3 <= .65 replace trans_low = . if obi3 == . replace trans_low = . if emu15 == 0 gen trans_hml = 0 replace trans_hml = 1 if trans_medium == 1 replace trans_hml = 2 if trans_high == 1 replace trans_hml = . if obi3 == . list country obi3 trans_high trans_medium trans_low trans_hml if year==2000 & emu15==1 * High transparency: Finland, France, Netherlands, Sweden, UK * Medium transparency: Austria, Belgium, Denmark, Germany, Ireland * Low transparency: Greece, Italy, Portugal, Spain xtreg sfa_new c.dpi_yrcurnt##i.trans_hml c.sgp##i.trans_hml c.booml3##i.trans_hml c.slump2##i.trans_hml lv_crisis_dummy y31 y33-y47 if obi3~=. & emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) * von Hagen & Wolff (2006) revisited, based on column 1 in their Table 2 * VH&W (p. 3269) on GMM: "We therefore specify a dynamic panel model with the lagged dependent variable * included as a regressor. We use the dynamic panel estimator by Arellano and Bond (1991), restricting * the number of lagged levels to five in the instrument set. To address the simultaneous equation bias * and endogeneity bias, we explicitly allow sfa, T x sfa [...] to be endogenous variables. This means * that all possible lags until t-1 of these variables in levels are included as instruments for these * endogenous variables. * VH&W (p. 3270) on interpretation: "As the coefficient [on SFA] is statistically not different from 1, * the estimated coefficient [the interaction term] represents the covariance between stock-flow adjustments * and the deficit in the second period, which we find to be significantly negative. In regression (1) of * Table 2, an increase of sfa by one percentage point results in a 0.25 percentage point lowering of the * deficit. This suggests that stock-flow adjustments have become a policy variable to control the deficit * in the time period when the fiscal rule was in place. In the earlier period, the regression results do not * imply any correlation between stock-flow adjustments and deficits. Thus, our results indicate that the * introduction of the fiscal rule led governments to systematically use stockflow adjustments to lower deficits. gen sfa_sgp = sfa_new * sgp set more off * GMM, conventional SEs xtabond debt_gdp_change sfa_new sgp sfa_sgp if obi3~=. & emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., lags(1) maxldep(5) endogenous(sfa_new sfa_sgp) test sfa_new = 1 * GMM, robust SEs xtabond debt_gdp_change sfa_new sgp sfa_sgp if obi3~=. & emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., lags(1) maxldep(5) endogenous(sfa_new sfa_sgp) robust test sfa_new = 1 * FE, conventional SEs xtreg debt_gdp_change l.debt_gdp_change sfa_new sgp sfa_sgp if obi3~=. & emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe test sfa_new = 1 * FE, clustered SEs xtreg debt_gdp_change l.debt_gdp_change sfa_new sgp sfa_sgp if obi3~=. & emu15==1 & weber_inflation < 20 & year<2008 & year>1989 & l.sfa_new~=. & l.balance_gdp_edf~=. & l.debt_gdp_change~=., fe cluster(country2) test sfa_new = 1