IDEAS home Printed from https://ideas.repec.org/a/vls/finstu/v16y2012i4p43-62.html
   My bibliography  Save this article

The Study Of Fiscal Sustainability For The Case Of Overindebted European Countries

Author

Listed:
  • STOIAN, Andreea

    (Department of Finance and CEFIMO, Bucharest University of Economic Studies)

Abstract

This study aims in analysing the fiscal sustainability for the case of European countries most affected by the economic downturn and sovereign debt: Portugal, Ireland, Italy, Greece and Spain. For that purpose, we apply fiscal reaction function which indicates the speed and the size of government response to shocks on public debt. We use annual data ranged on 1995-2013. The results show that only for the cases of Italy and Portugal governments managed to fulfil the conditions for a sustainable fiscal policy. For these countries, the response is positive and immediate. On contrary, for Ireland we detect a negative reaction in the sense of a decreasing primary surplus to the increase of public debt by 1 p.p.. For the cases of Greece and Spain, the results are not statistically significant and we cannot conclude whether fiscal policy is sustainable or not. But we can emphasize a positive reaction to the increase of public debt cost in the case of Spain.

Suggested Citation

  • STOIAN, Andreea, 2012. "The Study Of Fiscal Sustainability For The Case Of Overindebted European Countries," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 16(4), pages 43-62.
  • Handle: RePEc:vls:finstu:v:16:y:2012:i:4:p:43-62
    as

    Download full text from publisher

    File URL: ftp://www.eadr.ro/RePEc/vls/vls_pdf/vol16i4p43-62.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Luiz de Mello, 2008. "Estimating a fiscal reaction function: the case of debt sustainability in Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(3), pages 271-284.
    2. Francisco Carballo-Cruz, 2011. "Causes and Consequences of the Spanish Economic Crisis: Why the Recovery is Taken so Long?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(3), pages 309-328, September.
    Full references (including those not matched with items on IDEAS)

    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. Campos, Eduardo Lima & Cysne, Rubens Penha, 2017. "A time-varying fiscal reaction function for Brazil," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 795, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    2. Juan Carlos Cuestas & Karsten Staehr, 2014. "The great (De)leveraging in the GIIPS countries. Domestic credit and net foreign liabilities 1998–2013," Bank of Estonia Working Papers wp2014-4, Bank of Estonia, revised 10 Oct 2014.
    3. Mariona Lozano & Elisenda Rentería, 2019. "Work in Transition: Labour Market Life Expectancy and Years Spent in Precarious Employment in Spain 1986–2016," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(1), pages 185-200, August.
    4. Philip Arestis Author-Email: pa267@cam.ac.uk, 2017. "Housing Market in Israel: Is there a Bubble?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 64(1), pages 1-16, December.
    5. Murcia López, Guillermo & Delclós Clanchet, Jordi & Ubalde López, Mònica & Calvo Bonacho, Eva & Benavides, Fernando G., 2016. "Has the Spanish economic crisis affected the duration of sickness absence episodes?," Social Science & Medicine, Elsevier, vol. 160(C), pages 29-34.
    6. Karl Aiginger, 2013. "A New Strategy for the European Periphery," WIFO Working Papers 443, WIFO.
    7. Katia Berti & Eugeniu Colesnic & Cyril Desponts & Stephanie Pamies & Etienne Sail, 2016. "Fiscal Reaction Functions for European Union Countries," European Economy - Discussion Papers 2015 - 028, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Markus K. Brunnermeier & Isabel Schnabel, 2014. "Bubbles and Central Banks: Historical Perspectives," Working Papers 1411, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 31 Oct 2014.
    9. Karl Aiginger, 2013. "A Southern Europe strategy based on vision and industrial policy," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 82(01), pages 127-168.
    10. Molina Romo, Óscar, & Miguélez, Fausto., 2013. "From negotiation to imposition : social dialogue in austerity times in Spain," ILO Working Papers 994833443402676, International Labour Organization.
    11. Hela Ben Hassine Khalladi, 2019. "Fiscal fatigue, public debt limits and fiscal space in some MENA countries," Economics Bulletin, AccessEcon, vol. 39(2), pages 1005-1017.
    12. Philippe Burger & Ian C. Stuart & Charl Jooste & Mr. Alfredo Cuevas, 2011. "Fiscal sustainability and the fiscal reaction function for South Africa," IMF Working Papers 2011/069, International Monetary Fund.
    13. De Andrés Mosquera, Andrés, 2017. "Los determinantes a largo plazo y su contribución a la tasa de ahorro de los hogares españoles en el período 1985-2016 || Long-term determinants and its contribution to Spanish household saving rate d," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 24(1), pages 292-339, Diciembre.
    14. Bulbarelli, Miriam, 2016. "The housing finance system in Italy and Spain: Why did a housing bubble develop in Spain - and not in Italy?," PIPE - Papers on International Political Economy 26/2016, Free University Berlin, Center for International Political Economy.
    15. Silva, Alexandre Manoel Angelo & Cândido Júnior, José Oswaldo, 2010. "É o mercado míope em relação á política fiscal brasileira?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 64(4), December.
    16. Jorge Hernández-Pérez & Salvador Cruz Rambaud & Tomás Lorenzana de la Varga, 2019. "Economic situation, the key to understanding the links between CEOs’ personal traits and the financial structure of large private companies," PLOS ONE, Public Library of Science, vol. 14(7), pages 1-15, July.
    17. Kolluru Mythili & Hyams-Ssekasi Denis & Rao K.V.Ch.Madhu Sudhana, 2021. "A Study of Global Recession Recovery Strategies in Highly Ranked GDP EU Countries," Economics, Sciendo, vol. 9(1), pages 85-105, June.
    18. Luiz de Mello, 2007. "The Brazilian 'Tax War': The Case of Value-Added Tax Competition among the States," OECD Economics Department Working Papers 544, OECD Publishing.
    19. Larry D. Wall, 2012. "Central banking for financial stability Some lessons from the recent instability in the US and euro area," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(3), pages 247-280, August.
    20. Philip Arestis & Ana Rosa González-Martínez, 2015. "Is Job Insecurity a Driver of the Housing Cycle? Some Evidence in the Spanish Case," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 1-14, March.

    More about this item

    Keywords

    fiscal policy; fiscal sustainability; fiscal reaction function; primary balance; public debt;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    Statistics

    Access and download statistics

    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:vls:finstu:v:16:y:2012:i:4:p:43-62. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/cfiarro.html .

    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: Daniel Mateescu (email available below). General contact details of provider: https://edirc.repec.org/data/cfiarro.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.