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.
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 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
Contact details of provider:
Web page: http://184.108.40.206
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)
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.:
- Arne Heise, 2002. "Optimal Public Debts, Sustainable Deficits, and Budgetary Consolidation," Empirica, Springer, vol. 29(4), pages 319-337, December.
- Artis, Michael J & Marcellino, Massimiliano, 1998.
"Fiscal Solvency and Fiscal Forecasting in Europe,"
CEPR Discussion Papers
1836, C.E.P.R. Discussion Papers.
- Michael Artis & Massimiliano Marcellino, . "Fiscal Solvency and Fiscal Forecasting in Europe," Working Papers 142, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Artis, M. & Marcellino, M., 1998. "Fiscal Solvency and Fiscal Forecasting in Europe," Economics Working Papers eco98/2, European University Institute.
- James Payne, 1997. "International evidence on the sustainability of budget deficits," Applied Economics Letters, Taylor and Francis Journals, vol. 4(12), pages 775-779.
- Corsetti, Giancarlo & Roubini, Nouriel, 1991.
"Fiscal deficits, public debt, and government solvency: Evidence from OECD countries,"
Journal of the Japanese and International Economies,
Elsevier, vol. 5(4), pages 354-380, December.
- Giancarlo Corsetti & Nouriel Roubini, 1991. "Fiscal Deficits, Public Debt and Government Solvency: Evidence from OECD Countries," NBER Working Papers 3658, National Bureau of Economic Research, Inc.
- David W. Wilcox, 1987.
"The substainability of government deficits: implications of the present- value borrowing constraint,"
Working Paper Series / Economic Activity Section
77, Board of Governors of the Federal Reserve System (U.S.).
- Wilcox, David W, 1989. "The Sustainability of Government Deficits: Implications of the Present-Value Borrowing Constraint," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(3), pages 291-306, August.
- Haliassos, Michael & Tobin, James, 1990.
"The macroeconomics of government finance,"
Handbook of Monetary Economics,
in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 17, pages 889-959
- Bagnai, Alberto & Carlucci, Francesco, 2003. "An aggregate model for the European Union," Economic Modelling, Elsevier, vol. 20(3), pages 623-649, May.
- Persson, Torsten, 1985.
"Deficits and intergenerational welfare in open economies,"
Journal of International Economics,
Elsevier, vol. 19(1-2), pages 67-84, August.
- Torsten Persson, 1983. "Deficits and Intergenerational Welfare in Open Economies," NBER Working Papers 1083, National Bureau of Economic Research, Inc.
- Marco Buti & Gabriele Giudice, 2002. "Maastricht's Fiscal Rules at Ten: An Assessment," Journal of Common Market Studies, Wiley Blackwell, vol. 40(5), pages 823-848, December.
- James Tobin, 1986.
"The Monetary-Fiscal Mix: Long-Run Implications,"
Cowles Foundation Discussion Papers
780, Cowles Foundation for Research in Economics, Yale University.
- O'Connell, Stephen A & Zeldes, Stephen P, 1988.
"Rational Ponzi Games,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 431-50, August.
- Stephen A. O'Connell & Stephen P. Zeldes, . "Rational Ponzi Games," Rodney L. White Center for Financial Research Working Papers 18-86, Wharton School Rodney L. White Center for Financial Research.
- Howell H. Zee, 1988. "The Sustainability and Optimality of Government Debt," IMF Staff Papers, Palgrave Macmillan, vol. 35(4), pages 658-685, December.
- Buiter, Willem H & Corsetti, Giancarlo & Roubini, Nouriel, 1992.
"`Excessive Deficits': Sense and Nonsense in the Treaty of Maastricht,"
CEPR Discussion Papers
750, C.E.P.R. Discussion Papers.
- Buiter, W.H. & Corsetti, G. & Roubini, N., 1992. "Excessive Deficits: Sense and Nonsence in the Treaty of Maastricht," Papers 674, Yale - Economic Growth Center.
- James D. Hamilton & Marjorie A. Flavin, 1985.
"On the Limitations of Government Borrowing: A Framework for Empirical Testing,"
NBER Working Papers
1632, National Bureau of Economic Research, Inc.
- Hamilton, James D & Flavin, Marjorie A, 1986. "On the Limitations of Government Borrowing: A Framework for EmpiricalTesting," American Economic Review, American Economic Association, vol. 76(4), pages 808-19, September.
- Matthew Canzoneri & Behzad Diba, 1999. "The Stability and Growth Pact: A Delicate Balance or an Albatross?," Empirica, Springer, vol. 26(3), pages 241-258, September.
- Nigel Andrew Chalk & Richard Hemming, 2000. "Assessing Fiscal Sustainability in Theory and Practice," IMF Working Papers 00/81, International Monetary Fund.
- Smith, Gary, 1979. "The long run consequences of monetary and fiscal policies when the government's budget is not balanced," Journal of Public Economics, Elsevier, vol. 11(1), pages 59-79, February.
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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.