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Spanish Public Debt Sustainability Analysis

Author

Listed:
  • Carlos Cuerpo

    () (Autoridad Independiente de Responsabilidad Fiscal)

  • José Miguel Ramos

    () (Ministerio de Economía y Competitividad)

Abstract

This note develops an overarching debt sustainability analysis (DSA) framework, encompassing three of its main dimensions: (i) a traditional (deterministic) sustainability exercise, based on a simple accounting application involving the debt accumulation equation; (ii) an assessment of the realism of the assumptions underlying the deterministic debt projections; and (iii) a stochastic exercise aimed at understanding the uncertainty associated with the deterministic path. This framework is applied to the Spanish case, constructing and dissecting the baseline debt path associated with the official macro and fiscal projections. While Spanish public debt appears largely sustainable along this baseline, its realization seems optimistic in the light of historical experience.

Suggested Citation

  • Carlos Cuerpo & José Miguel Ramos, 2015. "Spanish Public Debt Sustainability Analysis," Hacienda Pública Española, IEF, vol. 215(4), pages 95-118, December.
  • Handle: RePEc:hpe:journl:y:2015:v:215:i:4:p:95-118
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    References listed on IDEAS

    as
    1. Kenneth Arrow & Partha Dasgupta & Lawrence Goulder & Gretchen Daily & Paul Ehrlich & Geoffrey Heal & Simon Levin & Karl-Göran Mäler & Stephen Schneider & David Starrett & Brian Walker, 2004. "Are We Consuming Too Much?," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 147-172, Summer.
    2. António Afonso, 2005. "Fiscal Sustainability: The Unpleasant European Case," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 19-44, March.
    3. Silvana Bartoletto & Bruno Chiarini & Elisabetta Marzano, 2013. "Is the Italian Public Debt Really Unsustainable? An Historical Comparison (1861-2010)," CESifo Working Paper Series 4185, CESifo Group Munich.
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    Cited by:

    1. repec:hpe:journl:y:2018:v:227:i:4:p:63-101 is not listed on IDEAS
    2. Checherita-Westphal, Cristina & Žďárek, Václav, 2017. "Fiscal reaction function and fiscal fatigue: evidence for the euro area," Working Paper Series 2036, European Central Bank.

    More about this item

    Keywords

    Public debt sustainability analysis; general government sector; fiscal reaction function; bootstrapping; vector autoregressive models;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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