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Politico-Economic Determinants of Public Debt Growth: A Case Study for Austria


  • Neck, Reinhard
  • Getzner, Michael


Based on a number of economic and particularly politico-economic arguments, we examine the reasons for the growth of the central government's debt in Austria using time series data for the period 1960 to 1999. Starting with an empirical test of Bohn's theory of sustainability of fiscal policy, which is based on Barro's tax-smoothing model, we extend the model to account for several politico-economic variables suggested by public choice theories. Keynesian stabilization policy objectives, influences of ideology and political parties, the form of government and the political business cycle are tested regarding their ability to explain the growth of public debt in Austria. There is some empirical evidence for systematic influence of government behavior in accordance with recent public choice theories. However, it seems that the most important influence on Austrian fiscal policy is the unemployment rate, which has a significant influence on the decisions made by policy-makers. Concluding, we briefly discuss the implications of these results for the prospects of reducing public debt in Austria in the near future. Copyright 2001 by Kluwer Academic Publishers

Suggested Citation

  • 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.
  • Handle: RePEc:kap:pubcho:v:109:y:2001:i:3-4:p:243-68

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    References listed on IDEAS

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    Cited by:

    1. Moessinger, Marc-Daniel, 2012. "Do personal characteristics of finance ministers affect the development of public debt?," ZEW Discussion Papers 12-068, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. repec:kap:iaecre:v:17:y:2011:i:2:p:134-156 is not listed on IDEAS
    3. Michał Mackiewicz & Piotr Krajewski, 2009. "On the mechanisms of achieving fiscal (un)sustainability: the case of Poland," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(4), pages 445-460, November.
    4. 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.
    5. Thushyanthan Baskaran, 2010. "On the link between fiscal decentralization and public debt in OECD countries," Public Choice, Springer, vol. 145(3), pages 351-378, December.
    6. repec:kap:iaecre:v:21:y:2015:i:3:p:299-315 is not listed on IDEAS
    7. J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
    8. Johann Bröthaler & Michael Getzner, 2011. "Fiscal Autonomy and Total Government Expenditure: An Austrian Case-study," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(2), pages 134-156, May.
    9. repec:kap:iaecre:v:21:y:2015:i:3:p:249-260 is not listed on IDEAS
    10. Marc-Daniel Moessinger, 2014. "Do the personal characteristics of finance ministers affect changes in public debt?," Public Choice, Springer, vol. 161(1), pages 183-207, October.
    11. Johann Bröthaler & Michael Getzner, 2015. "The Tax-Spend Debate and Budgetary Policy in Austria," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 299-315, August.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. 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.

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