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Assessing Sustainability of the Irish Public Debt

Author

Listed:
  • Kumar, Saten
  • Paradiso, Antonio

Abstract

This paper utilizes a small-scale econometric model to study the dynamics of the Irish debt-to-GDP ratio. The role of world GDP growth, domestic GDP growth, real effective exchange rate, interest rate and primary balance is analyzed in the debt dynamics. We find that the Irish economy will recover to its normal path by 2015. Policy interventions for higher primary balance and output growth, and the external positive scenarios for variables such as the world GDP growth, rate of interest and real effective exchange rate are desirable to help further reduce the debt path.

Suggested Citation

  • Kumar, Saten & Paradiso, Antonio, 2011. "Assessing Sustainability of the Irish Public Debt," MPRA Paper 35295, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35295
    as

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    References listed on IDEAS

    as
    1. Paolo Casadio & Antonio Paradiso & B. Bhaskara Rao, 2012. "The dynamics of Italian public debt: alternative paths for fiscal consolidation," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 635-639, May.
    2. Carlo A. Favero & Massimiliano Marcellino, 2005. "Modelling and Forecasting Fiscal Variables for the Euro Area," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(s1), pages 755-783, December.
    3. Bert Hofman & Helmut Reisen, 1990. "Debt Overhang, Liquidity Constraints and Adjustment Incentives," OECD Development Centre Working Papers 32, OECD Publishing.
    4. Andrews, Rick L, 1994. "Forecasting Performance of Structural Time Series Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(1), pages 129-133, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Debt to GDP ratio; Irish economy; Sustainability;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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