Keynesian And Neoclassical Fiscal Sustainability Indicators, With Applications To Emu Member Countries
AbstractThe purposes of this paper are twofold: first, it aims at critically evaluating the solvency criterion, pioneered by Hamilton and Flavin (1986), which is nowadays almost hegemonic in the analysis of public debt sustainability, and at illustrating alternative measures of sustainability grounded on the dynamic stability approach originated by Domar (1944); secondly, it looks at sustainability in EMU member countries, with particular attention given to the relations between sustainability and the design of fiscal rules. The results show that the 3% rule imposed by the Maastricht treaty can be justified as a sustainability requirement for an 'average' EMU member country. At the same time, the dispersion around this average is quite substantial: this questions the viability of uniform deficit caps across EMU member countries.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0411005.
Length: 27 pages
Date of creation: 14 Nov 2004
Date of revision:
Note: Type of Document - pdf; pages: 27
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public debt sustainability; dynamic analysis; solvency constraint; EMU; fiscal rules;
Other versions of this item:
- Alberto Bagnai, 2004. "Keynesian and neoclassical fiscal susteinability indicators, with applications to EMU member countries," Working Papers 75, University of Rome La Sapienza, Department of Public Economics.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-11-22 (All new papers)
- NEP-IFN-2004-11-22 (International Finance)
- NEP-MAC-2004-11-22 (Macroeconomics)
- NEP-PKE-2004-11-22 (Post Keynesian Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Maastricht e l'aritmetica del debito pubblico
by Alberto Bagnai in Goofynomics on 2013-01-07 23:19:00
- Pica, Federico & Villani, Salvatore, 2012.
"Debito, Mezzogiorno e sviluppo. A trivial exercise
[Sovereign Debt Sustainability, Mezzogiorno and Economic Growth. A Trivial Exercise]," MPRA Paper 43199, University Library of Munich, Germany, revised 28 Nov 2012.
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