1. bookVolume 13 (2018): Issue 1 (April 2018)
Journal Details
License
Format
Journal
eISSN
2344-5416
First Published
06 Mar 2015
Publication timeframe
3 times per year
Languages
English
access type Open Access

A Model to Simulate the Dynamics of Public Debt Sustainability in EU

Published Online: 08 May 2018
Page range: 90 - 96
Journal Details
License
Format
Journal
eISSN
2344-5416
First Published
06 Mar 2015
Publication timeframe
3 times per year
Languages
English
Abstract

Last decades the public debt increased continuously in all countries of European Union. At present, in many countries this dangerous growth is seriously affecting the general process of economic development. Although in a number of countries the public debt is today larger than 60% of GDP, as the imposed limit by Maastricht Treaty, the problem of its sustainability is varying from country to country. Following old and recent published studies in matter of public debt sustainability, one objective of our study is to analyse the existence of a convergence or a divergence process both at the level of the whole EU and within the two major groups of countries (EU14 – old members of EU, after Brexit, and respectively EU11 – new eastern members adhered to EU after 2000). Other objective is to build a model to simulate the long term dynamics of the public debt as a function of standard variables (such as GDP growth, interest rate, budgetary deficit, etc.). Moreover, by using recent data from Eurostat, IMF, and World Bank, we try to estimate few essential parameters in order to control the public debt sustainability in each country of EU. Finally, countries are grouped in a number of classes for which certain policy measures could be evaluated.

Keywords

Albu, L.-L. (2002): “Sustainability Function”, Romanian Jornal for Economic Forecasting, 2, 5-14.Search in Google Scholar

Albu, L.-L. (2008): “A Simulation model of public debt sustainability, MPRA Paper 11713, University Library of Munich, Germany.10.2139/ssrn.1554271Search in Google Scholar

Barro, R. (1988): “The Ricardian Approach to Budget Deficits”, NBER, Working Paper, no. 2685.Search in Google Scholar

Blanchard, O. J. (1990): “Suggestion for a New Set of Fiscal Indicators”, OECD Working Paper, 79.Search in Google Scholar

Coricelli, F. (1997): “Fiscal Policy a Long Term View”, Economic Policy Initiative, 3, Forum Report of the Economic Policy Initiative.Search in Google Scholar

Elmendorf, D.W. and Mankiw, G. (1998): “Government Debt”, Handbook of Macroeconomics, January.10.3386/w6470Search in Google Scholar

Dornbusch, R. (1987): Debts and Deficits, Leuven and MIT University Press.Search in Google Scholar

Fry, M. (1992): “Some Stabilizing and Destabilizing Effects of Foreign Debt Accumulation in Developing Countries”, Economics Letters, 39, 315-321.10.1016/0165-1765(92)90268-4Search in Google Scholar

Garcia, F. (1998): “Public Debt Sustainability and Demand for Monetary Base”, Working Papers IMF.Search in Google Scholar

Krejdl, A. (2006): “Fiscal Sustainability – Definition, Indicators and Assessment of Czech Public Finance Sustainability”, CNB Working Paper Series, 3, Czech National Bank.Search in Google Scholar

Langenus, G. (2006): “Fiscal Sustainability Indicators and Policy Design in the Face of Ageing”, NBB Working Papers - Research Series, 102, National Bank of Belgium.10.2139/ssrn.2005169Search in Google Scholar

Mello, L. and Hussein, K. (2001): “Is Foreign Debt Portfolio Management Efficient in Emerging Economies?”, August, Working Paper, IMF.10.5089/9781451854381.001Search in Google Scholar

Monokroussos, P. (2010): “Assessing fiscal policy with the use of sustainability indicators: The case of Greece”, Economy and Markets, Vol. V, Issue VI, December, Eurobank EFG Economic Research.Search in Google Scholar

Mundell, R.A. (1990): “Debts and Deficits in Alternative Macroeconomic Models”, Revista di Politica Economica, VII-VIII, 5-130.10.1007/978-1-349-22919-2_1Search in Google Scholar

Rocha, R.R. and Saldanha, F. (1992): “Fiscal and Quasi Fiscal Deficits, Nominal and Real Measurement and Policy Issues”, Working Paper, WPS.Search in Google Scholar

Roubini, N. and Sachs, J. (1989): “Government spending and budget deficits in the industrial countries”, Economic Policy, April.10.2307/1344465Open DOISearch in Google Scholar

Stournaras, Y. (1990): “Public Sector Debt and Deficits in Greece”, Revista di Politica Economica, VII-VIII, 405-440.Search in Google Scholar

*** European Commission (2006): “The long-term sustainability of public finances in the European Union”, European Economy, 4, Brussels.Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo