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Debt Sustainability and Fiscal Policy Rules in the European Union

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  • Ada Cristina MARINESCU

    (Department of Economics, Sociology and Law, School of Advanced Studies of the Romanian Academy)

Abstract

The sustainability of fiscal policy represents a subject which was studied extensively and the general conclusion of these studies is that fiscal policy is sustainable provided the intertemporal budget constraint is satisfied. The future expected discounted primary surpluses should exceed the value of public debt in order for public debt to be sustainable. The ability of governments to repay the debt will depend on the capacity to achieve future primary surpluses and on the stock of past debts. Fiscal policies are thus dependent on the intertemporal budget constraint, in case this condition is not fulfilled, then governments will have to change fiscal policies.

Suggested Citation

  • Ada Cristina MARINESCU, 2017. "Debt Sustainability and Fiscal Policy Rules in the European Union," Hyperion Economic Journal, Faculty of Economic Sciences, Hyperion University of Bucharest, Romania, vol. 5(4), pages 41-47, December.
    • Handle: RePEc:hyp:journl:v:5:y:2017:i:4:p:41-47
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    References listed on IDEAS

    as
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    6. Bohn, Henning, 2007. "Are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint?," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1837-1847, October.
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    More about this item

    Keywords

    fiscal policy; intertemporal budget constraint; primary surplus; public debt; fiscal rules;
    All these keywords.

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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