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Fiscal Deficit and Public Debt in Industrial Countries, 1970-1994

Author

Listed:
  • Mr. Domenico Fanizza
  • Mr. Vito Tanzi

Abstract

This paper assembles a set of relevant fiscal data, for both the individual countries and for the aggregate G-7 and 18 industrial countries, which covers a period long enough to allow an assessment of trends and the conduct of econometric tests. The “world” fiscal deficit has been rising since the 1970s and reached a historic high in 1993-94; the rise of the deficit has been accompanied by a significant decline in world saving. The paper argues that the increase in public debt, which has been the consequence of the accumulation of the fiscal deficits, has pushed up worldwide interest rates. Econometric evidence in support of this relationship is presented on the basis of panel data for the period 1970-93.

Suggested Citation

  • Mr. Domenico Fanizza & Mr. Vito Tanzi, 1995. "Fiscal Deficit and Public Debt in Industrial Countries, 1970-1994," IMF Working Papers 1995/049, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/049
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    Citations

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    Cited by:

    1. Claude Bismut & Ismael Ramajo, 2019. "A world of low interest rates," CEE-M Working Papers hal-02086234, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    2. Robert Holzmann & Yves Hervé & Roland Demmel, 1996. "The maastricht fiscal criteria: Required but ineffective?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(1), pages 25-58, February.
    3. Marco BUTI & Daniele FRANCO & Hedwig ONGENA, 1997. "Budgeetary Policies during Recessions : Retrospective Application of the Stability and Growth Pact” to the Post-War Period," Discussion Papers (REL - Recherches Economiques de Louvain) 1997041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Guy Debelle & James Vickery, 1998. "Is the Phillips Curve A Curve? Some Evidence and Implications for Australia," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 384-398, December.
    5. F C V N Fourie & P Burger, 2000. "Is Fiscal Sustainability Attainable? High Interest Rates, Low Growth and the General Balance Effect," South African Journal of Economics, Economic Society of South Africa, vol. 68(2), pages 90-102, June.
    6. Virén, Matti, 1999. "Fiscal Policy, Automatic Stabilisers and Policy Coordination in EMU," Discussion Papers 204, VATT Institute for Economic Research.
    7. Kiander, Jaakko & Virén, Matti, 2000. "Do automatic stabilisers take care of asymmetric shocks in the euro area?," Discussion Papers 234, VATT Institute for Economic Research.
    8. Matti Viren, 2000. "Measuring effectiveness of fiscal policy in OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 7(1), pages 29-34.
    9. Bulus Gokay Canberk, 2020. "Growth-maximizing public debt in Turkey: An empirical investigation," Economics and Business Review, Sciendo, vol. 6(3), pages 68-87, August.
    10. Stylianou Tasos, 2012. "Does Government Debt Promote Economic Growth? An Empirical Analysis with Structural Breaks for the Economy of China," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(45), pages 229-248, December.
    11. Claude Bismut & Ismaël Ramajo, 2021. "Nominal and real interest rates in OECD countries, changes in sight after covid-19?," International Economics and Economic Policy, Springer, vol. 18(3), pages 493-516, July.

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