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Government debt dynamics and the global financial crisis: Has anything changed in the EA12?

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  • Cuestas, Juan Carlos
  • Gil-Alana, Luis A.
  • Staehr, Karsten

Abstract

This paper seeks to shed light on possible changes in the government debt dynamics for the first 12 euro area countries. Structural breaks are present around the global financial crisis for most countries, but not for Germany and France, the two core countries in the euro area. The properties of the government debt dynamics differ markedly across the countries receiving bailouts.

Suggested Citation

  • Cuestas, Juan Carlos & Gil-Alana, Luis A. & Staehr, Karsten, 2014. "Government debt dynamics and the global financial crisis: Has anything changed in the EA12?," Economics Letters, Elsevier, vol. 124(1), pages 64-66.
    • Handle: RePEc:eee:ecolet:v:124:y:2014:i:1:p:64-66
    DOI: 10.1016/j.econlet.2014.04.014
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    References listed on IDEAS

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    1. Juan Carlos Cuestas & Karsten Staehr, 2013. "Fiscal shocks and budget balance persistence in the EU countries from Central and Eastern Europe," Applied Economics, Taylor & Francis Journals, vol. 45(22), pages 3211-3219, August.
    2. 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 808-819, September.
    3. Alfred Greiner & Uwe Köller & Willi Semmler, 2007. "Debt sustainability in the European Monetary Union: Theory and empirical evidence for selected countries," Oxford Economic Papers, Oxford University Press, vol. 59(2), pages 194-218, April.
    4. Luis A. Gil‐Alana, 2008. "Fractional integration and structural breaks at unknown periods of time," Journal of Time Series Analysis, Wiley Blackwell, vol. 29(1), pages 163-185, January.
    5. Guido Baldi & Karsten Staehr, 2013. "The European Debt Crisis and Fiscal Reaction Functions in Europe 2000-2012," Discussion Papers of DIW Berlin 1295, DIW Berlin, German Institute for Economic Research.
    6. Bohn, Henning, 1995. "The Sustainability of Budget Deficits in a Stochastic Economy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 257-271, February.
    7. van Riet, Ad, 2010. "Euro area fiscal policies and the crisis," Occasional Paper Series 109, European Central Bank.
    8. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    9. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
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    Cited by:

    1. Piotr Ciżkowicz & Andrzej Rzońca & Rafał Trzeciakowski, 2015. "Windfall of Low Interest Payments and Fiscal Sustainability in the Euro Area: Analysis through Panel Fiscal Reaction Functions," Kyklos, Wiley Blackwell, vol. 68(4), pages 475-510, November.
    2. Juan Carlos Cuestas, 2020. "Changes in sovereign debt dynamics in Central and Eastern Europe," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 25(1), pages 63-71, January.
    3. Panagiotis Pegkas, 2018. "The Effect of Government Debt and Other Determinants on Economic Growth: The Greek Experience," Economies, MDPI, vol. 6(1), pages 1-19, February.
    4. Simeon Coleman & Juan Carlos Cuestas, 2024. "On the evolution of competitiveness in Central and Eastern Europe: Is it broken?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2911-2926, July.
    5. Simeon Coleman & Juan Carlos Cuestas, 2019. "Current account and structural change in European transition economies," Working Papers 2019/08, Economics Department, Universitat Jaume I, Castellón (Spain).
    6. Cró, Susana & Martins, António Miguel, 2017. "Structural breaks in international tourism demand: Are they caused by crises or disasters?," Tourism Management, Elsevier, vol. 63(C), pages 3-9.
    7. Chen, Shyh-Wei & Wu, An-Chi, 2018. "Is there a bubble component in government debt? New international evidence," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 467-486.
    8. Juan Carlos Cuestas, 2019. "The current account sustainability in Central and Eastern Europe: Has it changed?," Working Papers 2019/10, Economics Department, Universitat Jaume I, Castellón (Spain).
    9. Juan Carlos Cuestas & Karsten Staehr, 2015. "Introduction," Economics and Business Letters, Oviedo University Press, vol. 4(4), pages 129-130.
    10. Juan Carlos Cuestas & Mercedes Monfort, 2021. "Current account sustainability in Central and Eastern Europe: structural change and crisis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(1), pages 141-153, February.
    11. Juan Carlos Cuestas & Luis A. Gil-Alana & Paulo José Regis, 2015. "The Sustainability of European External Debt: What have We Learned?," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 445-468, August.
    12. Juan carlos Cuestas & Barry Harrison, 2014. "Unemployment hysteresis in the EU15: Has anything changed?," Economics Bulletin, AccessEcon, vol. 34(4), pages 2308-2314.
    13. Pegkas Panagiotis, 2019. "Government Debt and Economic Growth. A Threshold Analysis for Greece," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 25(1), pages 1-6, February.
    14. Guglielmo Maria Caporale & Miguel A. Martin-Valmayor & Luis A. Gil-Alana & Nieves Carmona-González, 2024. "Persistence of the Sovereign Debt Components and Debt Sustainability: Some Evidence for the US and Europe," CESifo Working Paper Series 11409, CESifo.
    15. Juan Carlos Cuestas & Mercedes Monfort & Javier Ordóñez, 2020. "Is government consumption really crowding out investment? Evidence from the EU28," Working Papers 2020/05, Economics Department, Universitat Jaume I, Castellón (Spain).
    16. Baldi, Guido & Staehr, Karsten, 2016. "The European debt crisis and fiscal reactions in Europe 2000-2014," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(2), pages 297-317.
    17. Cuestas, Juan Carlos & Regis, Paulo José, 2018. "On the dynamics of sovereign debt in China: Sustainability and structural change," Economic Modelling, Elsevier, vol. 68(C), pages 356-359.
    18. Juan Carlos Cuestas & Luis A. Gil-Alana & Paolo Jose Regis, 2014. "On the changes in the sustainability of European external debt: what have we learned," Bank of Estonia Working Papers wp2014-3, Bank of Estonia, revised 10 Oct 2014.

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    More about this item

    Keywords

    Structural breaks; Debt stock; EU;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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