Sustainability of EU public finances
AbstractWe use a policy rule framework and focus on the response of the primary surplus to accumulated public debt to test a sufficient condition for sustainability. The evidence we report suggests that sustainability was prevalent in many EU countries before Maastricht, but also that the Maastricht impulse induced the shift towards sustainability in some of them. Additionally, although a clear distinction emerges in terms of the visibility of the Maastricht stress between the euro bloc, on the one hand, and the non-euro EU countries, the US and Japan, on the other, there is no evidence of bloc differences in terms of the long term soundness of public finances. On the basis of our analysis and results, we highlight the potential policy relevance of the reaction of the primary surplus to accumulated debt in the debate on the proper balance between fiscal stabilization and discipline in EMU.
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.
Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 225.
Length: 30 pages
Date of creation: Apr 2005
Date of revision:
Contact details of provider:
Postal: Coomunivcations Unit, B-1049 Bruxelles / Brussels
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
Stability and Growth Pact; public debt; sustainability; Maastricht; fiscal stabilization; accumulated debt; public finances; sustainability; Ballabriga; Martinez-Mongay;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
- Oscar Bajo-Rubio & Carmen Díaz-Roldán & Vicente Esteve, 2007.
"Deficit sustainability and inflation in EMU: An analysis from the fiscal theory of the price level,"
07-01, Asociación Española de Economía y Finanzas Internacionales.
- Bajo-Rubio, Oscar & Díaz-Roldán, Carmen & Esteve, Vicente, 2009. "Deficit sustainability and inflation in EMU: An analysis from the Fiscal Theory of the Price Level," European Journal of Political Economy, Elsevier, vol. 25(4), pages 525-539, December.
- António Afonso, 2008.
"Ricardian fiscal regimes in the European Union,"
Springer, vol. 35(3), pages 313-334, July.
- Afonso, António, 2005. "Ricardian fiscal regimes in the European Union," Working Paper Series 0558, European Central Bank.
- António Afonso, 2005. "Ricardian Fiscal Regimes in the European Union," Working Papers Department of Economics 2005/18, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Philipp Paulus, 2006. "The final blow to the Stability Pact? EMU enlargement and government debt," Otto-Wolff-Institut Discussion Paper Series 03/2006, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
- 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.
- Peter Wierts, 2007. "The sustainability of euro area debt: a re-assessment," DNB Working Papers 134, Netherlands Central Bank, Research Department.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ECFIN INFO).
If references are entirely missing, you can add them using this form.