IDEAS home Printed from https://ideas.repec.org/a/hyp/journl/v5y2017i4p41-47.html
   My bibliography  Save this article

Debt Sustainability and Fiscal Policy Rules in the European Union

Author

Listed:
  • Ada Cristina MARINESCU

    (Department of Economics, Sociology and Law, School of Advanced Studies of the Romanian Academy)

Abstract

The sustainability of fiscal policy represents a subject which was studied extensively and the general conclusion of these studies is that fiscal policy is sustainable provided the intertemporal budget constraint is satisfied. The future expected discounted primary surpluses should exceed the value of public debt in order for public debt to be sustainable. The ability of governments to repay the debt will depend on the capacity to achieve future primary surpluses and on the stock of past debts. Fiscal policies are thus dependent on the intertemporal budget constraint, in case this condition is not fulfilled, then governments will have to change fiscal policies.

Suggested Citation

  • Ada Cristina MARINESCU, 2017. "Debt Sustainability and Fiscal Policy Rules in the European Union," Hyperion Economic Journal, Faculty of Economic Sciences, Hyperion University of Bucharest, Romania, vol. 5(4), pages 41-47, December.
    • Handle: RePEc:hyp:journl:v:5:y:2017:i:4:p:41-47
    as

    Download full text from publisher

    File URL: https://hej.hyperion.ro/articles/4(5)_2017/HEJ%20nr4(5)_2017_A6Marinescu.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 949-963.
    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. Hakkio, Craig S & Rush, Mark, 1991. "Is the Budget Deficit "Too Large?"," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 429-445, July.
    4. 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.
    5. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
    6. Bohn, Henning, 2007. "Are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint?," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1837-1847, October.
    7. J. Ayuso-i-Casals & S. Deroose & E. Flores & L. Moulin, 2007. "The role of fiscal rules and institutions in shaping budgetary outcomes," European Economy - Economic Papers 2008 - 2015 275, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maciej Wysocki & Cezary Wójcik, 2021. "Fiscal sustainability in the EU after the global crisis: Is there any progress? Evidence from Poland," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3997-4012, July.
    2. Escario, Regina & Gadea, María Dolores & Sabaté, Marcela, 2012. "Multicointegration, seigniorage and fiscal sustainability. Spain 1857–2000," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 270-283.
    3. Wysocki, Maciej & Wojcik, Cezary & Freytag, Andreas, 2024. "Populists and fiscal policy: The case of Poland," European Journal of Political Economy, Elsevier, vol. 83(C).
    4. Maciej WYSOCKI & Cezary WÓJCIK, 2021. "Fiscal Sustainability in Poland: How Did the Public Policy Shift of 2016–2019 Impact the Country’s Long-Term," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 6, pages 777-798.
    5. Giancarlo Marini & Alessandro Piergallini, 2008. "Indicators and Tests of Fiscal Sustainability: An Integrated Approach," CEIS Research Paper 111, Tor Vergata University, CEIS, revised 11 Jul 2008.
    6. K. R. Shanmugam & K. Shanmugam, 2022. "Sustainability and Threshold Value of Public Debt in Tamil Nadu," Working Papers 2022-226, Madras School of Economics,Chennai,India.
    7. Helmut Herwartz & Malte Rengel, 2018. "Size-corrected inference in fiscal policy reaction functions: a three country assessment," Empirical Economics, Springer, vol. 55(2), pages 391-416, September.
    8. Paniagua, Jordi & Sapena, Juan & Tamarit, Cecilio, 2017. "Fiscal sustainability in EMU countries: A continued fiscal commitment?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 50(C), pages 85-97.
    9. Li, Tianyu & Du, Tongwei, 2021. "Vertical fiscal imbalance, transfer payments, and fiscal sustainability of local governments in China," International Review of Economics & Finance, Elsevier, vol. 74(C), pages 392-404.
    10. Maria Cornachione Kula, 2019. "The behavior of U.S. States’ debts and deficits," Public Sector Economics, Institute of Public Finance, vol. 43(3), pages 267-289.
    11. Cascio, Iolanda Lo, 2015. "A wavelet analysis of US fiscal sustainability," Economic Modelling, Elsevier, vol. 51(C), pages 33-37.
    12. Beqiraj, Elton & Fedeli, Silvia & Forte, Francesco, 2018. "Public debt sustainability: An empirical study on OECD countries," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 238-248.
    13. Cysne, Rubens Penha & Campos, Eduardo Lima, 2019. "Sustainability of the Brazilian public pebt an analysis using multicointegration," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 805, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    14. Magulsha George & K. R. Shanmugam, 2022. "Public Debt and External Debt Sustainability among BRICS Countries," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 16(3-4), pages 231-253, August.
    15. K. R. Shanmugam & P.S. Renjith, 2023. "Sustainability and Threshold Value of Public Debt of Centre and All State Governments in India," Working Papers 2023-240, Madras School of Economics,Chennai,India.
    16. Rathnayake, Anuruddhi Shanika K, 2020. "Sustainability of the fiscal imbalance and public debt under fiscal policy asymmetries in Sri Lanka," Journal of Asian Economics, Elsevier, vol. 66(C).
    17. Wysocki Maciej & Wójcik Cezary, 2018. "Sustainability of fiscal policy in Poland in the period 2004–2017," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 54(3), pages 219-226, September.
    18. D’Erasmo, P. & Mendoza, E.G. & Zhang, J., 2016. "What is a Sustainable Public Debt?," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2493-2597, Elsevier.
    19. Anton Velinov, 2014. "Assessing the Sustainability of Government Debt: On the Different States of the Debt/GDP Process," Discussion Papers of DIW Berlin 1359, DIW Berlin, German Institute for Economic Research.
    20. António Afonso & José Alves & Oļegs Matvejevs & Oļegs Tkačevs, 2023. "Fiscal Sustainability and the Role of Inflation," CESifo Working Paper Series 10843, CESifo.

    More about this item

    Keywords

    fiscal policy; intertemporal budget constraint; primary surplus; public debt; fiscal rules;
    All these keywords.

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hyp:journl:v:5:y:2017:i:4:p:41-47. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Iulian Panait (email available below). General contact details of provider: https://edirc.repec.org/data/fehypro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.