IDEAS home Printed from https://ideas.repec.org/a/ids/ijsuse/v4y2012i1p1-16.html
   My bibliography  Save this article

Is the Austrian public debt sustainable?

Author

Listed:
  • Reinhard Neck
  • Gottfried Haber

Abstract

Sustainability of public deficit and debt in the long run has received much attention in the international political agenda. This paper analyses whether Austrian fiscal policies have been sustainable during the last five decades. Tests indicate that Austrian fiscal policies were sustainable from 1960 to 1974, while from 1975 onwards public debt grew much more rapidly. Starting in 1975, the rate of unemployment played a significant role in the sense of a counter-cyclical orientation of Austrian fiscal policy as part of the concept of ‘Austrokeynesianism’. The development of public debt in Austria seems to be driven not only by ideology, but also by structural causes and a shift of the budgetary policy paradigm. We find some empirical evidence that governments in Austria dominated solely by one party run higher deficits than coalitions of the two large parties or the two conservative parties. There are no indications of a political business cycle.

Suggested Citation

  • Reinhard Neck & Gottfried Haber, 2012. "Is the Austrian public debt sustainable?," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 4(1), pages 1-16.
    • Handle: RePEc:ids:ijsuse:v:4:y:2012:i:1:p:1-16
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=43992
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gottfried Haber & Reinhard Neck, 2006. "Sustainability of Austrian public debt: a political economy perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 141-154, June.
    2. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 949-963.
    3. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    4. Barro, Robert J, 1986. " U.S. Deficits since World War I," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 195-122.
    5. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    6. Michael Getzner & Ernst Glatzer & Reinhard Neck, 2001. "On the Sustainability of Austrian Budgetary Policies," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(1), pages 21-40, March.
    7. Neck, Reinhard & Getzner, Michael, 2001. "Politico-Economic Determinants of Public Debt Growth: A Case Study for Austria," Public Choice, Springer, vol. 109(3-4), pages 243-268, December.
    8. Alberto Alesina & Roberto Perotti, 1995. "The Political Economy of Budget Deficits," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 1-31, March.
    9. Frey, Bruno S & Schneider, Friedrich, 1978. "An Empirical Study of Politico-Economic Interaction in the United States," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 174-183, May.
    10. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    11. James M. Poterba & Jürgen von Hagen, 1999. "Fiscal Institutions and Fiscal Performance," NBER Books, National Bureau of Economic Research, Inc, number pote99-1, May.
    12. Yianos Kontopoulos & Roberto Perotti, 1999. "Government Fragmentation and Fiscal Policy Outcomes: Evidence from OECD Countries," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 81-102, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Escudero, Verónica & López Mourelo, Elva & Pignatti, Clemente, 2020. "Joint provision of income and employment support: Evidence from a crisis response in Uruguay," World Development, Elsevier, vol. 134(C).
    2. Ranjan Kumar Mohanty & Sidheswar Panda, 2020. "How Does Public Debt Affect the Indian Macroeconomy? A Structural VAR Approach," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(3), pages 253-284, August.
    3. Mohanty, Ranjan Kumar & Panda, Sidheswar, 2019. "How Does Public Debt affect the Indian Macroeconomy? A Structural VAR Approach," Working Papers 19/250, National Institute of Public Finance and Policy.
    4. Reinhard Neck & Gottfried Haber & Andrea Klinglmair, 2015. "Austrian Public Debt Growth: A Public Choice Perspective," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 249-260, August.
    5. Ranjan Kumar Mohanty & Sidheswar Panda, 2019. "How Does Public Debt Affect the Indian Macroeconomy? A Structural VAR Approach," Working Papers id:12980, eSocialSciences.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Reinhard Neck & Gottfried Haber & Andrea Klinglmair, 2015. "Austrian Public Debt Growth: A Public Choice Perspective," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 249-260, August.
    2. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.
    3. Salih BARIŞIK & Abdullah BARIS, 2017. "Impact of governance on budget deficit in developing countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(611), S), pages 111-130, Summer.
    4. Marco Battaglini & Stephen Coate, 2008. "A Dynamic Theory of Public Spending, Taxation, and Debt," American Economic Review, American Economic Association, vol. 98(1), pages 201-236, March.
    5. Alesina, A. & Passalacqua, A., 2016. "The Political Economy of Government Debt," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2599-2651, Elsevier.
    6. Marcela Eslava, 2011. "The Political Economy Of Fiscal Deficits: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 645-673, September.
    7. Attiya Y. Javid & Umaima Arif & Asma Arif, 2011. "Economic, Political and Institutional Determinants of Budget Deficits Volatility in Selected Asian Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 50(4), pages 649-662.
    8. Markus Reischmann, 2016. "Empirical Studies on Public Debt and Fiscal Transfers," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 63.
    9. Koch, Daniel, 2011. "Wirksame Begrenzung von Staatsverschuldung auf europäischer Ebene," Discussion Paper Series 114, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    10. Stefanie Vanneste & Stijn Goeminne, 2020. "The role of the past in public policy: empirical evidence of the long-term effect of past policy and politics on the local budget balance," Economics of Governance, Springer, vol. 21(1), pages 75-99, March.
    11. Padovano, Fabio & Venturi, Larissa, 2001. "Wars of Attrition in Italian Government Coalitions and Fiscal Performance: 1948-1994," Public Choice, Springer, vol. 109(1-2), pages 15-54, October.
    12. Veronica Grembi & Tommaso Nannicini & Ugo Troiano, 2011. "Policy Responses to Fiscal Restraints: A Difference-in-Discontinuities Design," Working Papers 397, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    13. Johann Bröthaler & Michael Getzner & Gottfried Haber, 2015. "Sustainability of local government debt: a case study of Austrian municipalities," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 521-546, August.
    14. Christoph A. Schaltegger & Lars P. Feld, 2004. "Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-Federal Jurisdictions," CESifo Working Paper Series 1294, CESifo.
    15. Maria Manuel Pinho, 2008. "The political economy of public spending composition: evidence from a panel of OECD countries," FEP Working Papers 295, Universidade do Porto, Faculdade de Economia do Porto.
    16. Gottfried Haber & Reinhard Neck, 2006. "Sustainability of Austrian public debt: a political economy perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 141-154, June.
    17. Srđan Redžepagić & Matthieu Llorca, 2007. "Does Politics Matter in the Conduct of Fiscal Policy? Political Determinants of the Fiscal Sustainability: Evidence from Seven Individual Central and Eastern European Countries (CEEC)," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 54(4), pages 489-500, December.
    18. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
    19. Saeid Mahdavi, 2014. "Bohn's Test of Fiscal Sustainability of the American State Governments," Southern Economic Journal, John Wiley & Sons, vol. 80(4), pages 1028-1054, April.
    20. Woo, Jaejoon, 2003. "Economic, political, and institutional determinants of public deficits," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 387-426, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijsuse:v:4:y:2012:i:1:p:1-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=301 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.