Holmes, Mark J.2011-03-092011-03-092010Holmes, M.J. (2010). Nonlinearities, co-trending and budget balance sustainability. Economic Analysis & Policy, 40(3), 369-376.https://hdl.handle.net/10289/5152The study provides new evidence on the sustainability debate concerning the US budget balance. Existing studies are often only able to reject non-cointegration between government expenditure and revenue once structural breaks or regime changes are allowed for. Using a testing procedure advocated by Bierens, this study provides a different perspective on this issue. Government expenditure and revenue are both found to be stationary around a nonlinear deterministic trend, and they are co-trended insofar as they share a common nonlinear deterministic trend.eneconomicsJournal Article10.1016/S0313-5926(10)50036-5