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Sustainability of Austrian public debt: a political economy perspective

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  • Gottfried Haber
  • Reinhard Neck

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Abstract

Sustainablity of Austrian public debt is investigated in the context of political objectives such as stabilizing the business cycle, increasing chances for being re-elected and implementing the ideologies of political parties. Several tests indicate that Austrian fiscal policies were sustainable in the period 1960–1974, while from 1975 on, public debt grew much more rapidly. The development of public debt in Austria seems to be driven not primarily by ideology, but by structural causes and a shift in the budgetary policy paradigm. We find some empirical evidence that governments in Austria dominated by one party run higher deficits than coalition governments. There are no indications of a political business cycle.
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Suggested Citation

  • 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.
  • Handle: RePEc:kap:empiri:v:33:y:2006:i:2:p:141-154
    DOI: 10.1007/s10663-006-9012-1
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    File URL: http://hdl.handle.net/10.1007/s10663-006-9012-1
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    References listed on IDEAS

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    1. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 949-963.
    2. 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.
    3. 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.
    4. Alberto Alesina & Roberto Perotti, 1994. "The Political Economy of Budget Deficits," NBER Working Papers 4637, National Bureau of Economic Research, Inc.
    5. Henning Bohn, 2005. "The Sustainability of Fiscal Policy in the United States," CESifo Working Paper Series 1446, CESifo Group Munich.
    6. 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.
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    Citations

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    Cited by:

    1. Piotr Krajewski & Michal Mackiewicz & Agata Szymańska, 2016. "Fiscal Sustainability in Central and Eastern European Countries - A Post-Crisis Assessment," Prague Economic Papers, University of Economics, Prague, vol. 2016(2), pages 175-188.
    2. 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.
    3. Maximilian Goedl & Christoph Zwick, 2015. "Stochastic Stability of Public Debt: The Case of Austria," Graz Economics Papers 2015-02, University of Graz, Department of Economics.
    4. Andrea Silvestrini, 2010. "Testing fiscal sustainability in Poland: a Bayesian analysis of cointegration," Empirical Economics, Springer, vol. 39(1), pages 241-274, August.
    5. 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.
    6. 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.
    7. Latifa AITOUTOUHEN & Faris HAMZA, 2016. "Financial and Econometric Study of the Sustainability and Evaluation of Scenarios of Reforms for the Civil Regime of Moroccan," Turkish Economic Review, KSP Journals, vol. 3(4), pages 652-667, December.

    More about this item

    Keywords

    Fiscal policy; Sustainability; Time series; Political economy; H6; E6;

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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