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Medium- and Long-Term Fiscal Sustainability in Europe

Author

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  • Piotr Ptak

Abstract

The article focuses on the concept of fiscal sustainability in light of the European Commission’s Fiscal Sustainability Report 2012. The author discusses the concept of fiscal sustainability and examines sustainability indicators (S1 and S2) in the context of a sovereign debt crisis and population aging. The author uses an analytical approach as well as descriptive analysis and comparative methods in his research. He comments on the results of fiscal sustainability studies for Poland and Europe as a whole. The analysis of fiscal sustainability in Poland takes into account a recent increase in the statutory retirement age to 67 years for men and women and shows the detailed impact of that decision on the sustainability of public finances in the medium and long term. In the final part of the article, the author highlights the advantages and disadvantages of the approach used in the report. He concludes that the concept of fiscal sustainability cannot be used directly in day-to-day economic policy due to the high sensitivity of sustainability indicators to parameter changes. According to Ptak, the European Commission’s Fiscal Sustainability Report is an important policy document that should be updated regularly.

Suggested Citation

  • Piotr Ptak, 2014. "Medium- and Long-Term Fiscal Sustainability in Europe," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 25-52.
    • Handle: RePEc:sgh:gosnar:y:2014:i:2:p:25-52
    as

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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Mr. Julio Escolano, 2010. "A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates," IMF Technical Notes and Manuals 2010/002, International Monetary Fund.
    3. Julio Escolano, 2010. "A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates," IMF Technical Notes and Manuals 10/02, International Monetary Fund.
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    More about this item

    Keywords

    fiscal sustainability; sustainability indicators; primary balance; government debt; population aging;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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