Keynesian and neoclassical fiscal susteinability indicators, with applications to EMU member countries
The purposes of this paper are twofold: first, it aims at critically evaluating the solvency criterion, pioneered by Hamilton and Flavin (1986), which is nowadays almost hegemonic in the analysis of public debt sustainability, and at illustrating alternative measures of sustainability grounded on the dynamic stability approach originated by Domar (1944); secondly, it looks at sustainability in EMU member countries, with particular attention given to the relations between sustainability and the design of fiscal rules. The results show that the 3% rule imposed by the Maastricht treaty can be justified as a sustainability requirement for an â€œaverageâ€ EMU member country. At the same time, the dispersion around this average is quite substantial: this questions the viability of uniform deficit caps across EMU member countries.
|Date of creation:||Dec 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +39 6 49766353
Fax: +39 6 4462040
Web page: http://www.dipecodir.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Matthew Canzoneri & Behzad Diba, 1999. "The Stability and Growth Pact: A Delicate Balance or an Albatross?," Empirica, Springer, vol. 26(3), pages 241-258, September.
- David W. Wilcox, 1987.
"The substainability of government deficits: implications of the present- value borrowing constraint,"
Working Paper Series / Economic Activity Section
77, Board of Governors of the Federal Reserve System (U.S.).
- Wilcox, David W, 1989. "The Sustainability of Government Deficits: Implications of the Present-Value Borrowing Constraint," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(3), pages 291-306, August.
- James D. Hamilton & Marjorie A. Flavin, 1985.
"On the Limitations of Government Borrowing: A Framework for Empirical Testing,"
NBER Working Papers
1632, National Bureau of Economic Research, Inc.
- Hamilton, James D & Flavin, Marjorie A, 1986. "On the Limitations of Government Borrowing: A Framework for EmpiricalTesting," American Economic Review, American Economic Association, vol. 76(4), pages 808-19, September.
- Arne Heise, 2002. "Optimal Public Debts, Sustainable Deficits, and Budgetary Consolidation," Empirica, Springer, vol. 29(4), pages 319-337, December.
- Giancarlo Corsetti & Nouriel Roubini, 1991.
"Fiscal Deficits, Public Debt and Government Solvency: Evidence from OECD Countries,"
NBER Working Papers
3658, National Bureau of Economic Research, Inc.
- Corsetti, Giancarlo & Roubini, Nouriel, 1991. "Fiscal deficits, public debt, and government solvency: Evidence from OECD countries," Journal of the Japanese and International Economies, Elsevier, vol. 5(4), pages 354-380, December.
- James Payne, 1997. "International evidence on the sustainability of budget deficits," Applied Economics Letters, Taylor & Francis Journals, vol. 4(12), pages 775-779.
- Haliassos, Michael & Tobin, James, 1990.
"The macroeconomics of government finance,"
Handbook of Monetary Economics,
in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 17, pages 889-959
- Torsten Persson, 1983.
"Deficits and Intergenerational Welfare in Open Economies,"
NBER Working Papers
1083, National Bureau of Economic Research, Inc.
- Persson, Torsten, 1985. "Deficits and intergenerational welfare in open economies," Journal of International Economics, Elsevier, vol. 19(1-2), pages 67-84, August.
- Stephen A. O'Connell & Stephen P. Zeldes, .
"Rational Ponzi Games,"
Rodney L. White Center for Financial Research Working Papers
18-86, Wharton School Rodney L. White Center for Financial Research.
- Tobin, James, 1986.
"The Monetary-Fiscal Mix: Long-run Implications,"
American Economic Review,
American Economic Association, vol. 76(2), pages 213-18, May.
- Artis, M. & Marcellino, M., 1998.
"Fiscal Solvency and Fiscal Forecasting in Europe,"
Economics Working Papers
eco98/2, European University Institute.
- Michael Artis & Massimiliano Marcellino, . "Fiscal Solvency and Fiscal Forecasting in Europe," Working Papers 142, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Artis, Michael J & Marcellino, Massimiliano, 1998. "Fiscal Solvency and Fiscal Forecasting in Europe," CEPR Discussion Papers 1836, C.E.P.R. Discussion Papers.
- Nigel Andrew Chalk & Richard Hemming, 2000. "Assessing Fiscal Sustainability in Theory and Practice," IMF Working Papers 00/81, International Monetary Fund.
- Howell H. Zee, 1988. "The Sustainability and Optimality of Government Debt," IMF Staff Papers, Palgrave Macmillan, vol. 35(4), pages 658-685, December.
- Smith, Gary, 1979. "The long run consequences of monetary and fiscal policies when the government's budget is not balanced," Journal of Public Economics, Elsevier, vol. 11(1), pages 59-79, February.
- Buiter, W.H. & Corsetti, G. & Roubini, N., 1992.
"Excessive Deficits: Sense and Nonsence in the Treaty of Maastricht,"
674, Yale - Economic Growth Center.
- Buiter, Willem H. & Corsetti, Giancarlo & Roubini, Nouriel, 1992. "`Excessive Deficits': Sense and Nonsense in the Treaty of Maastricht," CEPR Discussion Papers 750, C.E.P.R. Discussion Papers.
- Bagnai, Alberto & Carlucci, Francesco, 2003. "An aggregate model for the European Union," Economic Modelling, Elsevier, vol. 20(3), pages 623-649, May.
- Marco Buti & Gabriele Giudice, 2002. "Maastricht's Fiscal Rules at Ten: An Assessment," Journal of Common Market Studies, Wiley Blackwell, vol. 40(5), pages 823-848, December.
When requesting a correction, please mention this item's handle: RePEc:sap:wpaper:wp75. 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: (Luisa Giuriato)
If references are entirely missing, you can add them using this form.