Debt sustainability in the European Monetary Union: Theory and empirical evidence for selected countries
AbstractThis paper studies the sustainability of fiscal policy for selected Euro-area countries. We focus on those countries that either have a high debt to GDP ratio (Italy) or have recently violated the Maastricht treaty by permitting more than three percent of the deficit to GDP ratio (France, Germany, and Portugal). We apply an approach developed by Bohn who proposes to study whether the primary surplus to GDP ratio is a positive function of the debt to GDP ratio which does not need arbitrary discount rates that other approaches have to assume. By controlling for the impact of other variables in this process, we can show that for the above mentioned countries fiscal policy shows evidence for sustainability, although the three percent rule of the Maastricht treaty might temporarily be violated. We also compare our results from the Euro-area countries to results obtained for the US fiscal policy. Copyright 2007 , Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 59 (2007)
Issue (Month): 2 (April)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- repec:hal:wpaper:hal-00744544 is not listed on IDEAS
- Eleftherios Goulas & Athina Zervoyianni, 2012. "Growth, Deficits and Uncertainty in a Panel of 28 Countries," Working Paper Series 52_12, The Rimini Centre for Economic Analysis.
- Gabriella Deborah Legrenzi & Costas Milas, 2011.
"Debt Sustainability and Financial Crises: Evidence from the GIIPS,"
CESifo Working Paper Series
3594, CESifo Group Munich.
- Gabriella Legrenzi & Costas Milas, 2011. "Debt Sustainability and Financial Crises: Evidence from the GIIPS," Working Paper Series 42_11, The Rimini Centre for Economic Analysis.
- Baumöhl, Eduard & Výrost, Tomáš & Lyócsa, Štefan, 2011. "Are we able to capture the EU debt crisis? Evidence from PIIGGS countries in panel unit root framework," MPRA Paper 30334, University Library of Munich, Germany.
- Jean-Michel Courtault & Riccardo Magnani, 2012. "How much can European governments squeeze out of their taxpayers?," CEPN Working Papers hal-00744544, HAL.
- Alfons Weichenrieder & Jochen Zimmer, 2013. "Euro Membership and Fiscal Reaction Functions," CESifo Working Paper Series 4255, CESifo Group Munich.
- Greiner, Alfred, 2012. "Public debt in a basic endogenous growth model," Economic Modelling, Elsevier, vol. 29(4), pages 1344-1348.
- repec:rim:rimwps:53_13 is not listed on IDEAS
- Nickel, Christiane & Rother, Philipp & Zimmermann, Lilli, 2010. "Major public debt reductions: Lessons from the past, lessons for the future," Working Paper Series 1241, European Central Bank.
- Maria do Rosario Correia & Reinhard Neck & Theodore Panagiotidis & Christian Richter, 2008. "An empirical investigation of the sustainability of the public deficit in Portugal," International Economics and Economic Policy, Springer, vol. 5(1), pages 209-223, July.
- Christian Schoder, 2013. "The fundamentals of sovereign debt sustainability: Evidence from 15 OECD countries," IMK Working Paper 107-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Greiner, Alfred & Kauermann, Göran, 2008. "Debt policy in euro area countries: Evidence for Germany and Italy using penalized spline smoothing," Economic Modelling, Elsevier, vol. 25(6), pages 1144-1154, November.
- Gabriella Deborah Legrenzi & Costas Milas, 2010. "Spend-and-Tax Adjustments and the Sustainability of the Government's Intertemporal Budget Constraint," CESifo Working Paper Series 2926, CESifo Group Munich.
- Alfred Greiner, 2011. "Economic Growth, Public Debt and Welfare: Comparing Three Budgetary Rules," German Economic Review, Verein für Socialpolitik, vol. 12(2), pages 205-222, 05.
- Alfred Greiner & Uwe Koeller & Willi Semmler, 2006. "Testing the sustainability of German fiscal policy: evidence for the period 1960â€“2003," Empirica, Springer, vol. 33(2), pages 127-140, June.
- Alfred Greiner, 2010. "Does the 'Golden Rule of Public Finance' imply a lower long-run growth rate? A clarification," Economics Bulletin, AccessEcon, vol. 30(2), pages 975-982.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.