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Public debt ratio and its determinants in France since 1890 Does econometrics support the historical evidence?


  • Dufrénot, G.
  • Triki, K.


Can the evolution of public debt be predicted from its determinants? While the recovery programs undertaken during the 2008 crisis have led to a big takeoff in public debt ratios, the factors likely to curb its upward spiraling dynamic are subject to considerable uncertainty and fuel debate among economists. Are budgetary consolidations alone sufficient? Is there a need to return to inflationary policies, or is strong economic growth the essential factor to bring about a drop in the public debt ratio? The present paper proposes a long term retrospective study of the French case. A model of advanced indicators for the debt ratio is proposed whose results are interpreted in the light of the historical context. It is shown that from the end of the 19th century to the beginning of the 1950s, growth, inflation and primary balances were factors capable of explaining the alternation between upward and downward phases in the debt ratio. Then, during the three decades of the post-war boom, very high inflation and economic growth masked nascent budgetary imbalances while the so-called “stop and go” policies were privileged. The 1980s marked a break in the sense that growth and improvement in the primary balances no longer allowed the upward dynamics of the debt ratio to be reversed.

Suggested Citation

  • Dufrénot, G. & Triki, K., 2012. "Public debt ratio and its determinants in France since 1890 Does econometrics support the historical evidence?," Working papers 385, Banque de France.
  • Handle: RePEc:bfr:banfra:385

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    References listed on IDEAS

    1. Filardo, Andrew J. & Gordon, Stephen F., 1998. "Business cycle durations," Journal of Econometrics, Elsevier, vol. 85(1), pages 99-123, July.
    2. Marc Flandreau & Jacques Le Cacheux, 1997. "Dettes publiques et stabilité monétaire en Europe. Les leçons de l'étalon or," Revue Économique, Programme National Persée, vol. 48(3), pages 529-538.
    3. repec:spo:wpecon:info:hdl:2441/649 is not listed on IDEAS
    4. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    5. Filardo, Andrew J, 1994. "Business-Cycle Phases and Their Transitional Dynamics," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(3), pages 299-308, July.
    6. Ritschl, Albrecht, 1996. "Sustainability of High Public Debt: What the Historical Record Shows," CEPR Discussion Papers 1357, C.E.P.R. Discussion Papers.
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    More about this item


    Public debt; debt ratio; advanced indicators; economic history; forewarning indicator.;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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